This study compares the pre-and postprivatization financial and operating performance of 85 companies from 28 industrialized countries that were privatized through public share offerings for the period from 1990 through 1996. We document significant increases in profitability, output, operating efficiency, and dividend payments-and significant decreases in leverage ratios-for our full sample of firms after privatization, and for most subsamples examined. Capital expenditures increase significantly in absolute terms, but not relative to sales. Employment declines, but insignificantly. Combined with results from two previous, directly comparable studies, these findings strongly suggest that privatization yields significant performance improvements. DURING THE PAST TWO DECADES, the privatization of state-owned enterprises has moved from being a radical, almost desperate, policy initiative of the Thatcher government in Britain to being an accepted economic policy for governments of all ideological stripes. According to Gibbon~1998!, $860 billion has been raised by governments worldwide through privatizations, with the bulk of this total coming since 1987, and at least one commentator~Rochẽ 1996!! predicts that no less than $6 trillion will be raised through privatizations over the next two decades. In 1997 alone, sales of public enterprises totaled a record $161 billion worldwide, with more than $110 billion of the total coming during the second half of the year, and 1998's total of almost $140 billion indicates that the pace shows no sign of slackening as we approach a new millennium.
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