The performance of state-owned enterprises and newly privatized firms: Empirical evidence from Egypt

摘要

Even though it is well documented that privatization leads to an improvement in the performance of state-owned enterprises (SOEs) following divestiture, it is argued that the existing literature suffers from a misspecification measure because it does not consider the performance of control firms of similar pre-privatization situations, i.e. the performance of SOEs.In this study, I use accounting-based performance measures to evaluate the performance of newly privatized Egyptian firms versus the performance of SOEs. I document significant improvements in profitability, efficiency, and dividends, and insignificant decreases in leverage, employment, and risk, whereas capital expenditure and output show insignificant decreases following privatization. Matching sample firms (privatized) to control firms (SOEs), I document that privatized firms do not witness any significant improvement in their performance, which questions the benefits of privatization in Egypt.