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Public Ownership and Business Performance in the Spanish Manufacturing Sector, 1983-1996

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  • Pablo Hernández de Cos
  • Isabel Argimón
  • José Manuel González-Páramo

Abstract

This article presents empirical evidence for the Spanish case on the hypothesis that public ownership may be a determinant of a firm’s performance. Two alternative definitions of efficiency are proposed: relative productivity and profitability. The former tries to approximate the concept of technical or productive efficiency, whereas the latter is associated with allocative or price efficiency. The role of ownership is tested, conditioning for the degree of competition, the financial position of the firm, and labor quality. The data used are a sample of Spanish manufacturing firms for the period 1983-1996. The results show a negative and significant coefficient of the public ownership variable, which would denote that public ownership has a negative effect on efficiency. In addition, the degree of competition seems to have a positive and significant effect on firm’s performance. As for the variables that proxy the degree of financial constraint, the coefficient of the cash flow per unit of capital has a positive and significant sign.

Suggested Citation

  • Pablo Hernández de Cos & Isabel Argimón & José Manuel González-Páramo, 2004. "Public Ownership and Business Performance in the Spanish Manufacturing Sector, 1983-1996," Public Finance Review, , vol. 32(2), pages 148-182, March.
    • Handle: RePEc:sae:pubfin:v:32:y:2004:i:2:p:148-182
    DOI: 10.1177/1091142103258232
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    References listed on IDEAS

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    Cited by:

    1. Cabeza Garcia, Laura & Gomez Anson, Silvia, 2007. "The Spanish privatisation process: Implications on the performance of divested firms," International Review of Financial Analysis, Elsevier, vol. 16(4), pages 390-409.
    2. Arocena, Pablo & Oliveros, Diana, 2012. "The efficiency of state-owned and privatized firms: Does ownership make a difference?," International Journal of Production Economics, Elsevier, vol. 140(1), pages 457-465.
    3. Laura Cabeza García & Silvia Gómez Ansón, 2012. "What Drives the Operating Performance of Privatised Firms?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(1), pages 1-27, February.

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