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The Financial and Operating Performance of Privatized Firms in Sweden

Author

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  • Tatahi, Motasam

    (European Business School London)

  • Heshmati, Almas

    (Jönköping University)

Abstract

This paper examines the change in operating and financial performance of Swedish firms that were either partly or fully privatized during the period of 1989-2007. Two different methods are used to empirically investigate the performance of privatized firms. First, accounting data prior to and after the privatization are employed to measure the operating performance of privatized firms. We have found no significant difference in performances under state and private ownerships. Second, a return-based event study is found useful to measure the financial performance of privatized firms, since all the firms in the sample that were privatized have used an initial public offering (IPO). This approach allows comparison to the rest of the IPOs that were launched in the same period. It is found that the cumulative returns for the privatized firms are significantly different to private counterparts. Overall results, however, show that the privatization in Sweden was not as successful as it might have been expected and in comparison with those in other countries.

Suggested Citation

  • Tatahi, Motasam & Heshmati, Almas, 2009. "The Financial and Operating Performance of Privatized Firms in Sweden," IZA Discussion Papers 3953, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3953
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    References listed on IDEAS

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    More about this item

    Keywords

    Sweden; efficiency; performance measure; privatization; ratio analysis; event-study; public and private relationship;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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