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.
Part One – Privatization Concept and Theories
In the sphere of economic politics, the concept of privatization, which emerged within the framework of policies implemented in response to the Cold War, was first used in the 1979 election manifesto of the Conservative Party under Margaret Thatcher. Although privatization practices are widely reported to have started in the UK with the Thatcher government, according to Megginson, the first large-scale “Denationalization”, that is, the sale of public enterprises, occurred in the Federal German Republic during the tenure of Konrad Adenauer’s 1957 government; namely, in 1961, when the majority public share of Volkswagen was offered to the public, with priority given to small investors (Megginson etal., 1994: 406–407).
In the literature, it is generally stated that the foundation of the privatization concept was laid by Peter Drucker in his book The Age of Discontinuity, published in 1969, and that the term reprivatization was first used as “denationalization”. This term was used to refer to private sector businesses that became publicly owned, before, in time, becoming private again; however, the use of the term dates back to earlier times. The concepts privatization and reprivatization were defined in the Webster’s Third New International Dictionary of the English Language Unabridged, published in 1961, as “the transfer of the ownership and control of an enterprise from the public to the private sector” (Bel, 2006: 188).
1.1. Definition of the Privatization Concept
Privatization is the total or partial transfer of public responsibility to the private sector,...
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