Does Divestment Matter for Firm Performance? Evidence from the Indian Experience

Download or read book Does Divestment Matter for Firm Performance? Evidence from the Indian Experience written by Saibal Ghosh and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We employ data on federal government-owned public enterprises since the 1980s that encompass the partial privatization program to examine its impact on a gamut of performance measures. The analysis indicates that fully government-owned firms are significantly less profitable than partially privatized ones. The evidence also indicates that while the improvements in profitability largely occur during the one to three years just before privatization, the progress in terms of leverage and employment are typically spread out over a much longer period. Finally, the results indicate that the auction method of privatization maximizes government revenues, after controlling for the state of economic activity and other macroeconomic factors.