The optimal timing of initial public offerings in the course of privatization: Theory and an illustrative application

Privatization has been studied primarily from the standpoint of the post-privatization performance of state-owned firms (SOEs) or of various ways of valuing and privatizing them, but little attention has been paid to the timing of privatization. In this paper we use real options analysis to consider a situation where the government has the option to delay a planned privatization in the expectation that exogenous events may make the firm more valuable to outside investors in the future. In addition to considering the theoretical aspects of the problem, we apply our model to Taiwan's privatization program to add to the understanding of the role of option value in an actual privatization program. Our results suggest that the (mis)timing of privatization represents significant losses for the government and for investors.     

Fiscal impact of privatization revisited: The role of tax revenues in transition economies

In contrast to earlier literature, this paper finds empirical evidence that privatization has deteriorated fiscal balances in transition economies. The investigation focuses on the role of tax revenues in explaining the fiscal impact of privatization, as it appears that tax revenue in many transition countries remained lackluster even after the adoption of several tax reforms in the last two decades, and no formal econometric assessment has been conducted of the extent to which privatization has affected tax revenues. Using panel data for 29 Eastern European and former Soviet Union countries, the analysis finds robust signs of a strong negative impact of privatization on different tax revenue sources. The paper also provides some empirical evidence favoring the early adoption of value-added taxes that appear to have contributed to government revenue recovery.     

PEASANTS AGAINST PRIVATE PROPERTY RIGHTS: A REVIEW OF THE LITERATURE

Land is the main – if not the only – asset for a majority of people in developing countries. The definition and allocation of rights over land are thus naturally essential aspects of individuals’ daily lives, as well as critical determinants of social and economic development. The privatization of land rights has long been seen as a necessary process, enhancing both efficiency and equity. However, privatized land rights have not always emerged endogenously, while exogenously driven programs of land privatization have not always been successful nor popular. This has raised questions about the expected benefits of land rights privatization. This paper aims at summarizing the main arguments and studies, both theoretical and empirical, on this issue, with a specific focus on the factors that can make privatization inefficient or detrimental for the most concerned individuals.     

Objectives,Techniques and valuation of state-owned companies in privatization processes

This article aims to analyse the objectives and the techniques of privatization and the valuation methods applied in the state-owned company privatization processes in order to determine the coherence between the formal privatization objectives stated by governments and the techniques and the valuation methods chosen to carry out the sale of state-owned companies. From the results of an international survey carried out by the International Organization of Supreme Audit Institutions (INTOSAI), we study the privatization practices in three groups of countries: the most developed OECD countries, Eastern European countries and developing countries. While the reasons that have motivated state-owned company privatizations all over the world are quite similar, the techniques of privatization used by these three groups are different with regard to the purpose of the privatization, the ways of carrying it out and the methods of fixing the sale price.     

PRIVATIZATION AND EFFICIENCY: FROM PRINCIPALS AND AGENTS TO POLITICAL ECONOMY

Abstract.  We survey the theoretical literature on privatization and efficiency by tracing its evolution from the applications of agency theory to recent contributions in the field of political economy. The former extend the theory of regulation with incomplete information to address privatization issues, comparing state-owned enterprises with private regulated firms. The benefits of privatization may derive either from the constraints it places on malevolent agents or from the impossibility of commitment by a benevolent government because of incomplete contracts. Contributions dealing with political economy issues separate privatization from restructuring decisions. They either explore bargaining between managers and politicians or analyse the impact of privatization shaped by political preferences on efficiency. The theoretical results regarding the relation between privatization and efficiency do not lead to any definitive conclusion. Privatization may increase productive efficiency when restructuring takes place whereas its effects on allocative efficiency still remain uncertain.     

Privatization, Labor and Social Safety Nets

Privatization promotes economic efficiency and growth, thereby reinforcing macroeconomic adjustment. In the short run, however, it can lead to job losses and wage cuts for workers. This paper discusses these adverse impacts of privatization in terms of various methods of privatization and surveys the existing empirical evidence. It finds that public sales and auctions can have stronger negative effects on workers but maximize the government's revenue. Policymakers' options for mitigating the social impact of privatization are surveyed.     

PARTIAL PRIVATIZATION, TECHNOLOGY SPILLOVERS, AND FOREIGN OWNERSHIP RESTRICTION

Using a mixed oligopoly model with foreign ownership, this paper examines the interaction between two market-opening policies: the relaxation of foreign ownership restriction and the privatization of domestic public firms. It particularly focuses on technology spillovers, which could be one of the most prominent motivations for introducing foreign investment into a domestic market. The first result demonstrates that the optimal level of privatization is affected by technology spillovers from foreign investment and is negatively related with the magnitude of technology spillovers. The second result shows that the optimal level of privatization is lower when foreign ownership restriction is abolished than that when foreign ownership is not fully allowed. The third result indicates that the government relaxes regulations on foreign ownership of domestic firms only if the magnitude of technology spillovers is significant.     

Privatization in transition economies: Privatization scale and country size

This paper examines determinants of privatization in transition countries. Empirical studies of privatization are few and even fewer formal empirical analyses of privatization in transition countries exist. Another goal is to examine differences between large-scale and small-scale privatization. We find that scales of privatization respond differently to various determinants. Particularly, privatization scales are sensitive to changes in economic prosperity, unemployment, and inflation. Country size, not government size, seems to be driving privatization in transition countries. Effects of Soviet legacy are non-existent. Some findings are unique to the literature, while others differ from existing studies. Policy implications are discussed.     

国有企业民营化的环境影响研究

十九大提出要深化国有企业改革,加快发展混合所有制经济。基于2007—2015年我国A股上市公司数据,从企业环境表现的视角研究国有企业进行民营化改革的非经济性后果。研究发现,国有企业民营化后,企业的环境表现会有所下降,但这种现象只在政府环保补贴少的企业和环境监管力度弱的地区中存在。上述研究从环境表现的视角提供了国有企业民营化改革后果的经验证据,对丰富国有企业民营化改革的认识、更好地完善民营化企业的环境治理具有借鉴意义。     

企业私有化程度提高则社会环境会变差？

从企业私有化角度出发,构建二元经济理论模型和实证模型分析私有化对环境污染的影响。理论研究发现,由于城市部门资本密集程度高于农村部门,而且如果农村劳动者从环境改善中获得的边际效用小于城市劳动者从环境改善中获得的边际效用,那么提高私有化导致单位产出污染排放减少时会引起：（1）劳动和资本要素会向城市流动,城市工业部门产出增加;农业部门由于劳动和资本流出而导致产出减少,即城市扩张而农村收缩;(2)城市地区的失业总人数会增加;(3)私有化导致单位产出污染排放减少的效应大于工业产出增加导致污染排放增加的效应,最终导致社会环境改善,但如果私有化导致单位产出污染排放增加,则会得出相反的结论。实证结果表明：企业私有化水平提高有利于降低单位产出固体废物、废水、二氧化硫和烟尘等污染物的排放,资本投入也有利于降低单位产出污染物的排放。     

The Auction Price of Apartments in Moscow: Hedonic Estimation in Disequilibrium1

The purpose of this paper is to see how economic factors determine prices in the previously communist countries undergoing privatization. This does not concern the auctions of big state enterprises where the prices are found to be rigged. In this paper we estimate hedonic price functions based on a unique data set on auction prices of apartments in Moscow. We collected the data ourselves by attending the auctions and gathered data on the characteristics. We estimated the hedonic equations using a disequilibrium approach because no equilibrium prices were observed for large number of apartments that were withdrawn from the auction. We found that, as the privatization of residential housing was carried out, the hedonic price equations fit the data remarkably well.     

Privatization and economic performance: evidence from Chinese provinces

Based upon an aggregate production function, this paper develops a growth model to test the hypothesis that the further the ownership moves into private hands, the greater are efficiency gains and the more rapid is economic growth. Using provincial data in the period 1985–1997, the paper finds that the hypothesis cannot be rejected in China. That is to say, provinces with greater progress in privatization witnessed greater gains in marginal productivity of capital and more rapid economic growth. To test the robustness of the finding, the study classifies forms of ownership into different categories that represent variant degree of the privatization process. The finding suggests that China should pursue the ownership reform in the direction of privatization to maintain growth momentum.     

The Fragmentation of a Railway: A Study of Organizational Change

abstract    This paper considers pathways of organizational change within British Rail (BR) during its long period of commercialization culminating in privatization. The Laughlin (1991 ) and Parker (1995a ) frameworks are used to demonstrate how a new interpretative scheme supplanted the previous interpretative scheme within BR between the 1970s and privatization in the mid-1990s, leading to a fragmented organization. BR did not survive and privatization of Britain's railways remains controversial. The study demonstrates that without the earlier changes in interpretive scheme from 'social railway' to 'business railway' to 'profitable business', and the associated changes in design archetypes and sub-systems, privatization would have been both less tempting and less feasible. It is intended that the approach developed here to analyse organizational change in BR should be applicable to the study of other privatizations and to other forms of organizational change in both the public and private sectors.     

Environmental taxes in a differentiated mixed duopoly

Beladi and Chao (2006) and Bárcena-Ruiz and Garzón (2006) considered the role of environmental policy on the decision whether to privatize a public firm in different market structures. This paper re-examines whether privatization improves (or deteriorates) the environment in a mixed duopolistic framework with differentiated product and pollution abatement. It is shown that, due to privatization, less attention is paid to pollution abatement by all the firms coupled with less environment taxes levied by the government in a differentiated duopoly, and the environment is more (less) damaged when the product is less (more) substitutable. When the product is highly substitutable, industry profits increase because this softens the intensity of the product market, but social welfare deteriorates accompanied with the path of privatization because the loss of consumer surplus and tax revenue exceeds the increases in profits, even if the environment is less damaged.     

On bank privatization: The case of Egypt

This paper discusses the controversy regarding the privatization of the banking sector in Egypt. It provides an overview of the structure and evolution of the banking system, in the context of the series of reform measures undertaken by the Egyptian authorities over the past decades. The paper assesses the performance of the state-owned banks versus private banks over the period 1995–2005. Microprudential indicators, such as capital adequacy, asset quality, earnings, and profitability, reveal that state-owned banks lag behind in terms of efficiency and performance, compared to their private counterparts. Results also suggest that retaining government ownership can adversely affect banks performance. The paper explores the factors hindering the smooth implementation of bank privatization. The authors indicate that the financial sector reform currently adopted is comprehensive; however it is confronted with various political, social, and economic risks, which raise concerns regarding its sustainability. The paper then draws on the existing literature to provide guidance to policy makers, regarding effective and successful implementation of bank privatization.     

劳资和谐对公营事业民营化推动的影响

文章主要论述了劳资和谐对公营事业民营化推动的影响,通过对台湾地区中钢公司资深员工的深入调查,并经调查资料分析,证明中钢公司民营化顺利原因主要在于劳资和谐,而且中钢公司民营化最重要的做法是保障员工的权益,最后文章提出可行性建议,供有关单位及人员参考。     

台湾公营事业民营化的发展及其对大陆的启示

台湾自1953年公布"公营事业移转民营条例"正式推动民营化政策至今,其历史已超过50年,文章从民营化法令修订更迭历程分析其趋势,发现台湾公营事业民营化的政策朝加强员工权益保障、容许部分民营化、重视公股管理等趋向发展,据此对大陆公营事业民营化政策推动提出5项启示供参考。     

FULL OF EASTERN PROMISE - UNDERSTANDING HOUSING PRIVATIZATION IN POST-SOCIALIST COUNTRIES

In a period of economic transition, many commentators have identified the inefficiencies, distortions and inequalities which exist in the housing system of post-socialist countries of Central and Eastern Europe. These structural flaws are deemed to be incompatible with the adoption of free market principles and economic liberalization. For economic and political reasons the reform of the housing system has become a necessary and indispensable element of the market reform process. This paper contributes to the growing debate on the context in which housing reform and housing privatization programs have been adopted in Europe's post-socialist economies. The paper goes on to argue that the introduction of housing privatization and the preoccupation with owner-occupation has not been based on any overall assessment of what has occurred elsewhere in western Europe or on the experience of housing provision in other advanced western capitalist countries. The economically driven orthodox approach towards privatization and the way this has been translated into the housing system of post-socialist countries raises important policy questions on the longer term viability of housing provision and the creation of a sustainable housing system.     

PARTIAL PRIVATIZATION UNDER ASYMMETRIC MULTI‐MARKET COMPETITION

Under the assumption that a public firm provides goods or services to two markets and that a private firm provides goods or services to one market only, this study examines whether public firms should be privatized. It also investigates how the production quantity of a private firm changes when its degree of privatization increases. We find that when the market share of a duopoly market is large (small), partial privatization (nationalization) is socially preferable. We also find that the quantity produced by the private firm does not always increase along with the degree of privatization.     

Does divestment matter for firm performance?: Evidence from the Indian experience

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.