A meta-analysis of the impact of privatization on firm performance

Abstract

Purpose Despite the vast literature on privatization, the relationship between change of ownership and performance is not clear. The purpose of this paper is to understand why divergences are found between the empirical results of papers analyzed. Design/methodology/approach The author applies a meta-analysis to a sample of 60 empirical studies that analyze the performance of privatized companies. The author checks whether different results on performance can be explained by the method of privatization and the level of development of the country of privatized companies. Findings The findings indicate that companies privatized by public offerings obtain a better performance than companies privatized using other methods, such as private sale or voucher privatization, and do not support the common-place assumption that privatization in developing countries does not improve financial performance. Originality/value The study contributes to the literature on privatization because it adds new empirical evidence about the privatization programs and it first applies a meta-analysis to a sample about privatization on state-owned companies. The author discusses theoretical and managerial implications and offers suggestions for future research on privatization.