The Financial and Operating Performance of Newly Privatized Firms: an International Empirical Analysis

This study compares the pre- and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990. Our results document strong performance improvements, achieved surprisingly without sacrificing employment security. Specifically, after being privatized, firms increase real sales, become more profitable, increase their capital investment spending, improve their operating efficiency, and increase their work forces. Furthermore, these companies significantly lower their debt levels and increase dividend payout. Finally, we document significant changes in the size and composition of corporate boards of directors after privatization.

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The performance of newly privatized firms: The case of Portugal

Journal of Governance and Regulation ◽

10.22495/jgr_v1_i2_p6 ◽

2012 ◽

Vol 1 (2) ◽

pp. 92-125

Author(s):

José Manuel Bernardo Vaz Ferreira

Keyword(s):

Capital Structure ◽

Economic Activity ◽

Capital Investment ◽

Operational Performance ◽

Operating Efficiency ◽

Activity Levels ◽

Partial Privatization ◽

Financial Health ◽

Privatized Firms ◽

Public Share

The aim of this study is to investigate the pre and post privatization financial, social and operational performance of forty two Portuguese companies in most of sectors of economic activity that experience full or partial privatization through public share offering, direct sale or public contest, for the period from 1989 to 2009. That is, this work investigates, whether or not, the privatization of sate-owned enterprises (SOE’s) had caused improvements on the economic and financial health of those privatized companies, as it is suggested by the literature of property rights, public choice and agency theory. First, we document significant improvements on profitability, operating efficiency, capital investment, real output, dividend payout, treasury applications, activity levels and capital structure. Secondly, we experience significant decreases in employment after privatization. Third, we observe that, following privatization, the financial equilibrium (short and long) of firms was negatively affected. Lastly, our results are generally robust surviving the partition of the dataset into various sub-samples.

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The Financial and Operational Performances of Privatized Banks: The Philippine Experience

Review of Pacific Basin Financial Markets and Policies ◽

10.1142/s021909150300116x ◽

2003 ◽

Vol 06 (04) ◽

pp. 441-472 ◽

Cited By ~ 1

Author(s):

Pablo F. Mangaran

Keyword(s):

Capital Investment ◽

The Philippines ◽

T Test ◽

Operational Performance ◽

Operating Efficiency ◽

Federal Republic Of Germany ◽

Wilcoxon Rank Sum Test ◽

Significant Difference ◽

Before And After ◽

Investment Spending

It is widely believed that a great deal of the privatization efforts of governments started in the United Kingdom during the Thatcher Administration. Records show that the first effort to privatize government enterprises started in the Federal Republic of Germany during the time of Prime Minister Adenaur. One of the most remarkable aspects of the privatization efforts of governments is how similar their objectives are to that of Thatcher's. Raising revenue is the primary goal. Apart from this, governments likewise consider the more important objective of improving the financial and operating performance of privatized firm by exposing it to market forces. Thus privatization is also expected to increase the firm's profitability; to increase its operating efficiency; to allow the firm to increase its investment spending; to increase its output; and to maintain employment levels in order to accomplish the just cited objectives, although governments expect employment levels to decline. The financial and operational performance of commercial banks that were privatized in the Philippines was studied. Four banks before privatization and only three banks after privatization, due to the merger of two banks, were considered. The event study flow of analysis was utilized, i.e., the financial and operational performance of the banks three years before privatization was compared with their performance three years after privatization. Major financial measures of profitability, operating efficiency, capital investment spending, output changes, employment changes, leverage charges and dividend payout were considered. Wilcoxon rank sum test and t-test for differences in means were utilized. When the major financial ratios were considered, the Wilcoxon rank sum test results showed that there was significant difference in the median performance before and after privatization in real sales. We applied the t-test for differences in average performance before and after privatization of the bank. Results showed significant differences in mean return on sales, return on assets, real sales and total employment. At this point, Philippine banks that were privatized can already claim substantial improvements in their operational and financial performance.

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The performance of family firms: A study of “going public” effect in Portugal

Corporate Ownership and Control ◽

10.22495/cocv14i4art12 ◽

2017 ◽

Vol 14 (4) ◽

pp. 132-149

Author(s):

José Manuel Bernardo Vaz Ferreira

Keyword(s):

Capital Investment ◽

Family Firms ◽

Operating Efficiency ◽

Activity Levels ◽

Financial Health ◽

Going Public ◽

Traditional Family ◽

Policy Performance ◽

The Family ◽

Public Share

The aim of this study is to investigate the pre and post going public process of the operational, social, and financial and dividend policy performance of twenty-five Portuguese family companies in most of the sectors of economic activity that went public through public share offering and direct sale. In a family firm, the business belongs to a family, in which, most of the family members work. This investigation develops a framework to conclude if the decision to open the capital by the traditional family firms to the investors, in general, had caused or not, improvements on the economic and financial health of those firms. On the economic side, we find relevant declines in profitability, operating efficiency and activity levels and an increase in capital investment and real output. On the employment side, we document an irrelevant decline on employment. On the financial side, we observe that the financial equilibrium of firms after going public was negatively affected. On the dividend side, we document an increase in the dividend payout. Lastly, our results are generally robust surviving the partition of the dataset into various sub-samples.

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Boards of directors in Russian publicly traded companies: the gender aspect

Voprosy Ekonomiki ◽

10.32609/0042-8736-2018-2-142-155 ◽

2018 ◽

pp. 142-155 ◽

Cited By ~ 1

Author(s):

T. A. Garanina ◽

A. A. Muravyev

Keyword(s):

Boards Of Directors ◽

Company Performance ◽

Corporate Boards ◽

Publicly Traded ◽

Publicly Traded Companies ◽

Representation Of Women ◽

Female Directors ◽

Female Director ◽

Gender Aspect ◽

Longitudinal Dataset

This article studies the gender composition of corporate boards of Russian companies, including its relation to company performance. The analysis is based on a unique longitudinal dataset of virtually all Russian companies whose shares were traded on the stock market in 1998-2014. It shows a relatively small representation of women, just 12% of all the seats, while about 40% of the companies did not have any female director. At the same time, both the share of companies that appoint female directors and the share of female directors on boards show a clear upward trend. The econometric analysis suggests a positive link between the presence of female directors on boards and company performance, especially when firms appoint several, rather than one, female directors.

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The World Economic Forum Principles on "Climate Governance on Corporate Boards": can soft law help to face climate change around the world?

CORPORATE GOVERNANCE AND RESEARCH & DEVELOPMENT STUDIES ◽

10.3280/cgrds1-2019oa8509 ◽

2020 ◽

pp. 37-55

Author(s):

Sabrina Bruno

Keyword(s):

Climate Change ◽

South Africa ◽

Comparative Analysis ◽

Boards Of Directors ◽

Soft Law ◽

Corporate Boards ◽

World Economic Forum ◽

Financial Factor ◽

The World ◽

World Economic

Climate change is a financial factor that carries with it risks and opportunities for companies. To support boards of directors of companies belonging to all jurisdictions, the World Economic Forum issued in January 2019 eight Principlescontaining both theoretical and practical provisions on: climate accountability, competence, governance, management, disclosure and dialogue. The paper analyses each Principle to understand scope and managerial consequences for boards and to evaluate whether the legal distinctions, among the various jurisdictions, may undermine the application of the Principles or, by contrast, despite the differences the Principles may be a useful and effective guidance to drive boards' of directors' conduct around the world in handling climate change challenges. Five jurisdictions are taken into consideration for this comparative analysis: Europe (and UK), US, Australia, South Africa and Canada. The conclusion is that the WEF Principles, as soft law, is the best possible instrument to address boards of directors of worldwide companies, harmonise their conduct and effectively help facing such global emergency.

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Gender Changes In Corporate Boards Of Directors

10.15405/epsbs.2019.03.25 ◽

2019 ◽

Author(s):

M.E. Rodionova

Keyword(s):

Boards Of Directors ◽

Corporate Boards

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The Implications of a Jeopardy! Computer Named Watson: Beating Corporate Boards of Directors at Fiduciary Duties?

SSRN Electronic Journal ◽

10.2139/ssrn.2720070 ◽

2011 ◽

Author(s):

Roger M. Groves

Keyword(s):

Boards Of Directors ◽

Corporate Boards ◽

Fiduciary Duties

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Differentiating control, monitoring and oversight

Accounting Auditing & Accountability Journal ◽

10.1108/aaaj-12-2015-2345 ◽

2017 ◽

Vol 30 (8) ◽

pp. 1867-1894 ◽

Cited By ~ 3

Author(s):

Margaret M. Cullen ◽

Niamh M. Brennan

Keyword(s):

Boards Of Directors ◽

Role Theory ◽

Legal Responsibility ◽

Primary Role ◽

Investment Fund ◽

Corporate Boards ◽

Content Type ◽

Board Of Director ◽

Expectations Gap ◽

Board Type

Purpose Boards of directors are assumed to exercise three key accountability roles – control, monitoring and oversight roles. By researching one board type – investment fund boards – and the power relations around those boards, the purpose of this paper is to show that such boards are not capable of operating the three key roles assumed of them. Design/methodology/approach The authors conducted 25 in-depth interviews and a focus group session with investment fund directors applying a grounded theory methodology. Findings Because of their unique position of power, the authors find that fund promoter organisations (that establish and attract investors to the funds) exercise control and monitoring roles. As a result, contrary to prior assumptions, oversight is the primary role of investment fund boards, rather than the control role or monitoring role associated with corporate boards. The findings can be extended to other board-of-director contexts in which boards (e.g. subsidiary boards, boards of state-owned entities) have legal responsibility but limited power because of power exercised by other parties such as large shareholders. Practical implications Shareholders and regulators generally assume boards exercise control and monitoring roles. This can lead to an expectations gap on the part of shareholders and regulators who may not consider the practical realities in which boards operate. This expectations gap compromises the very objective of governance – investor protection. Originality/value Based on interviews with investment fund directors, the authors challenge the control-role theory of investment fund boards of directors. Building on our findings, and following subsequent conceptual engagement with the literature, the authors differentiate control, monitoring and oversight roles, terms which are often used interchangeably in prior research. The authors distinguish between the three terms on the basis of the level of influence implied by each.

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Board size and firm operating performance: Evidence from Germany

Corporate Board role duties and composition ◽

10.22495/cbv5i1art4 ◽

2009 ◽

Vol 5 (1) ◽

pp. 37-47

Author(s):

Andrea Graf ◽

Markus Stiglbauer

Keyword(s):

Operating Performance ◽

Board Structure ◽

Corporate Boards ◽

Optimum Size ◽

Negative Effects ◽

Return On Assets ◽

Board Size ◽

Return On Equity ◽

Listed Firms ◽

Management Board

Determining the optimum size of corporate boards is an important task for companies. Agency theory suggests that either too large or too small boards cause negative effects on firm operating performance. For a given sample of 113 listed firms in the German Prime market, we tested the effect of board size on return on assets and return on equity. Our findings provide evidence that there is a significantly negative Management Board size effect both on return on assets and return on equity. The results are consistent with the assumption of dysfunctional norms of behaviour within the German two-tier board structure.

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The Composition Of Corporate Boards Of Directors: Does Industry Matter?

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v10i3.6854 ◽

2012 ◽

Vol 10 (3) ◽

pp. 157 ◽

Cited By ~ 6

Author(s):

Dan Marlin ◽

Scott W. Geiger

Keyword(s):

Boards Of Directors ◽

Retail Trade ◽

Future Research ◽

Corporate Boards ◽

Font Size ◽

Corporate Board ◽

Publicly Traded ◽

Trade Finance ◽

Board Characteristics ◽

Publicly Traded Firms

The purpose of this study is to identify and examine differences in corporate board characteristics across four industries. Using a sample of 2592 US publicly traded firms, eleven board characteristics were identified and then examined across manufacturing, retail trade, finance/insurance, and services industries. Our analyses revealed significant differences in each of the eleven board characteristics examined. Implications and areas for future research are discussed.

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