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Pre and Post Disinvestment Performance Evaluation of Indian CPSEs

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  • Priya Mandiratta
  • G.S. Bhalla

Abstract

The fact that government-owned firms are typically less proficient or at least less gainful than private owned firms is widely hypothesized. Therefore, the disinvestment policy aims at dropping the participation of the public sector in the economic actions of the country in order to support private sector. The research endeavour set out to empirically examine the financial and operating performance of 15 Central Public Sector Enterprises (CPSEs) disinvested in India through public share offering mode during 2003–2012. Sample firms represent four cognate groups, that is, manufacturing, mining, electricity and service sectors. Through ratio analysis, different ratios such as return on assets, return on equity, sales efficiency, net income efficiency, debt equity, dividend payout, real sales and employment levels have been computed. Using the traditional pre versus post privatization comparisons and panel data estimation techniques, researchers have found significant increase in sales efficiency and net income efficiency, that is, overall operating efficiency, whereas insignificant results have been witnessed in the case of profitability position. This study provides new empirical evidence about performance changes in CPSEs disinvested through involvement of retail investors, that is, public offering mode in Indian economy.

Suggested Citation

  • Priya Mandiratta & G.S. Bhalla, 2017. "Pre and Post Disinvestment Performance Evaluation of Indian CPSEs," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 42(2), pages 120-134, May.
    • Handle: RePEc:sae:manlab:v:42:y:2017:i:2:p:120-134
    DOI: 10.1177/0258042X17716601
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    Cited by:

    1. Ghosh, Sudipta & Aithal, Sreeramana, 2022. "A Relative Study of Average Investment Returns between Manufacturing Sector and Service Sector of CPSEs in India," MPRA Paper 112061, University Library of Munich, Germany.
    2. Matthew Baird & A.V. Chari & Shanthi Nataraj & Alexander Rothenberg & Shqiponja Telhaj & L. Alan Winters, 2019. "The public sector and the misallocation of labor: evidence from a policy experiment in India," CEP Discussion Papers dp1596, Centre for Economic Performance, LSE.

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