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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 Three – Efficiency Analysis of Privatization through Initial Public Offerings (IPOs) in Turkey

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3.1. Data and Methodology

The data of public enterprises which were privatized, partially or fully, as IPOs at the İstanbul Stock Exchange were collected. The time period chosen was between 1988 and 2008. As a consequence of these selection criteria, ten firms were included in the sample. As can be seen in Table 3.1, the Turkish government emphasized privatizing public enterprises of different sizes, operating in different sectors of the economy such as transportation, petroleum, manufacturing, banking, retail and automotive production. When we decided to choose firms that were privatized through IPOs at the İstanbul Stock Exchange, we focused on examining the main and strategic privatizations.

Table 3.1 Privatized Companies which are used in analysis

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Source: Republic of Turkey Prime Ministry Privatization Administration, 2013

The following approach was used to measure the operating performance of these firms. Based on accounting data that we collected from the data stream, we carried out our analysis. An event study was completed to evaluate each firm’s equity return performance by looking at the shares’ abnormal returns. To test whether or not a statistically significant change after privatization took place, the standard test for differences in the mean performance of the two populations was carried out.

Abnormal returns generated during the period of the IPO were used as procedure for measuring the financial performance (efficiency) of the firms. What was considered most was to examine whether or not privatized...

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