This book examines the financial performance of Turkish firms that were privatized by way of IPOs (Initial Public Offerings). The author uses event study methodology to empirically evaluate the financial efficiency of privatized firms. She also compares the equity returns of state firms to the returns of private sector firms that were listed in the same period or in the same sector. The pre-and-post privatization performance is tested using the Wilcoxon signed-rank test involving accounting data and financial ratios of the privatized firms. Empirical findings of post privatization analysis indicate improvements in firm performance in regard to real sales, leverage and capital expenditures.
Privatization seems to belong in Pandora’s Box, which contains far-reaching consequences such as all good and bad
After following since the 1960s inward-oriented economic policies based on an import-substitution development strategy implemented through Five-Year Development Plans, Turkey shifted to neoliberal economic policies after experiencing high inflation rates and a severe balance of payment crisis in the early 1980s. These policies were composed of gradually removing import quotas and custom duties, capital control, attracting foreign investment, and practicing privatizations (Sönmez and Pamukçu, 2011: 3).
Turkey’s experience with privatization, however, is problematic and protracted. There were many factors that delayed the progress of privatization in Turkey. These factors were the judicial system, political chaos and nationalist ideologies which were opposed to privatization. The implementation of privatizations was hindered by legal challenges and intense opposition from trade unions which were focused on the social consequences of privatization, in particular, the unemployment of state workers (Ağartan, 2009: 2, 227).
Privatization may affect an economy in terms of employment, capital accumulation, the deployment of more advanced equipment and technology, but mostly by increasing the efficiency of firms. Indeed, the major contribution of private capital to a developing economy consists in fostering a higher level of efficiency by introducing and diffusing new technologies, knowledge, and skills to the previously state-owned firms.
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