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Privatization Performance in Turkey

Esra Kabaklarlı

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.

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Part Two – Privatization in the World and Privatization History of Turkey


In the 19th century, proponents of nationalization claimed that it stimulated economic efficiency. State ownership benefited consumers and increased social welfare by ensuring that companies had sufficient investment and profits to be passed onto consumers through lower prices. Having a big single company rather than lots of little privately-owned ones would increase productivity through large economies of scale (Economist, 2015). State ownership of enterprises was favored by economists and politicians in the mid-1900s, though monopoly power and externalities often produces market failures. Because of the poor performance and inefficient operations of state-owned companies, governments all around the world started to privatize these enterprises in the 1980s. Thousands of public enterprises have since been turned over to private sector in Europe, Africa Asia, and Latin America (Chong and Silanes, 2005).

The global financial crisis of 2008 has applied renewed pressures for privatization as increased government expenditures and diminishing revenues have led to growing budget deficits. As such, concerns that the 2008 global crisis would produce a wave of nationalizations appear to have been unfounded. Government interventions occurred mainly in economically developed countries, primarily in the form of a temporary rescue of troubled financial institutions rather than a permanent government takeover of the private sector. Bank nationalizations in emerging countries appear to have been limited to a few cases in Latvia (Parex Bank) and Kazakhstan (BTA and Alliance Bank). In other sectors, nationalization was limited to electricity utilities in Argentina and Bolivia, although Bolivia began nationalizing in 2006...

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