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Selling family silver to pay the grocers bill? The case of privatization in India

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  • Nandini Gupta

Abstract

Using data on Indian government-owned firms, we investigate the effect of privatization on the performance of these firms. Our results suggest that privatization is positively associated with the profitability and efficiency of of government-owned firms. Despite the small number of transactions, selling majority equity stakes to private owners has an economically significant impact on firm performance. Moreover, privatization is not associated with layoffs or a decline in employee compensation. These results are robust to controlling for the observable and unobservable characteristics of firms selected for privatization, and industry and country level reforms.

Suggested Citation

  • Nandini Gupta, 2010. "Selling family silver to pay the grocers bill? The case of privatization in India," Working Papers 2222, School of International and Public Affairs, Columbia University, revised Oct 2010.
    • Handle: RePEc:ecq:wpaper:2222
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    File URL: http://indianeconomy.columbia.edu/sites/default/files/working_papers/wp_2010-2_v2.pdf
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    References listed on IDEAS

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    8. Roman Frydman & Cheryl Gray & Marek Hessel & Andrzej Rapaczynski, 1999. "When Does Privatization Work? The Impact of Private Ownership on Corporate Performance in the Transition Economies," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1153-1191.
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    Cited by:

    1. Jain, Ritika, 2017. "Public sector enterprise disinvestment in India: Efficiency gains in a political context," Journal of Asian Economics, Elsevier, vol. 53(C), pages 18-36.

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