Is Privatization a Free Lunch? New Evidence on Ownership Status and Firm Performance

Posted: 31 Mar 1998

See all articles by Bryan Roberts

Bryan Roberts

BearingPoint

Yevgeny Gorkov

PriceWaterhouseCoopers LLP

Jay Madigan

PriceWaterhouseCoopers LLP

Date Written: January 1998

Abstract

Recent studies that use panel data to assess the impact of privatization on firm performance suggest that privatization positively affects growth in sales, productivity and, more surprisingly, employment. Using survey data on 90 enterprises in the Republic of Kyrgyzstan during 1993-1995, we also find that the typical privatized Kyrgyz firm had substantially higher rates of growth of sales revenue and labor productivity, and somewhat higher employment growth, than the typical state-owned firm in 1995. Empirical evidence to date thus suggests that privatization would have reduced Kyrgyz unemployment, they do show that state enterprises were quite willing to fire workers. We find no evidence that positive selection bias was important in our sample, and we do not find that outsider-owned firms outperformed insider-owned firms. Finally, there is some evidence that the better productivity performance of privatized firms was due to managerial human capital turnover.

JEL Classification: H4

Suggested Citation

Roberts, Bryan Wilson and Gorkov, Yevgeny and Madigan, Jay, Is Privatization a Free Lunch? New Evidence on Ownership Status and Firm Performance (January 1998). Available at SSRN: https://ssrn.com/abstract=67230

Bryan Wilson Roberts (Contact Author)

BearingPoint ( email )

1676 International Drive
McLean, VA 22102
United States

Yevgeny Gorkov

PriceWaterhouseCoopers LLP

1301 Avenue of the Americas
New York, NY 10019
United States

Jay Madigan

PriceWaterhouseCoopers LLP

1301 Avenue of the Americas
New York, NY 10019
United States

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