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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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Review and Conclusions


Privatization started in Turkey in 1988 to generate important fiscal revenues for the government and improve the performance of the state owned companies and management process. Privatization in Turkey not only seeks to minimise state intervention in business activities and to relieve the financial burden of public companies on the national budget, but also develop of capital markets and re-allocate resources to new investments. Following the January 4, 1980 resolutions, a free market system was adopted, and the privatization phenomenon entered the Turkish state’s agenda. The first privatization conducted through public offering was the privatization of Teletaş Corporation, which produced telephone and related equipment, in 1988. In this first instance, 22 % of the 40 % portion of shares allocated for sale were sold to the public, with the remaining 18 % being kept as a “golden share” under the public participation fund.

Finding a simple recipe for privatization policies is very difficult. Privatization efficiency may vary from country to country, from sector to sector, and even it shows differences according to firm. But some of privatization realities doesn’t change in terms of firm size or country. The impact of the privatization on employment is negative for the reason that state firms generally hired people based on political ciriteria more than skill and education criteria .The privatized firms has to adjust new market conditions , invest on infrastrucute and modernize the buildings and production factors. Because of the fact that many of the privatized firms debt ratio...

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