33

|**Authors**|**Methodology**|**MainFindings**|
|---|---|---|
|_Joumal_of_FinancialEconomics._53:<br>217-253.||and<br>asymmetric<br>information<br>respectively)<br>and<br>thereforedoes notleadtoanymeaningful<sup>insights.</sup><br>Thestudyalsofindsthatinibalretumson<sup>SIPsare:</sup><br>(i)positivelyrelatedtothefractionof<sup>theSOE on</sup><br>offer,(ii)positively relatedtotheincome<sup>inequalityin</sup><br>thecountry,and<br>(iii)notinverselyrelatedtothe<br>marketvalueoftheformer<sup>SOE.</sup>|
|Megginson,William,RobertNash,<br>andMatthiasvan Randenborgh.<br>1994.'TheFinancialandOperating<br>Performance<br>ofNewtyPrivatized<br>Firms:AnIntemationalEmpirical<br>Analysis."_JoumalofFinance._49:<br>403-452.|Compares<br>both<br>pre<br>and<br>post-<br>privatization<br>3-year<br>average<br>performance ratiosfor61firmsin 18<br>countriesovertheperiod 1961-1989.|Significantincreasesinoutput,operating<sup>efficiency,</sup><br>profitability,<br>capital<br>investment<br>spending<br>and<br>dividendpaymentsarefound along<sup>withsignificant</sup><br>decreasesinleverage.The changesinemployment<br>afterprivatizationarefoundtobeinsignificant|
|Megginson,William, RobertNash,<br>JeffryNetter,andAdamSchwartz.<br>2000. 'The LongTerm<br>Retumto<br>Investors<br>in<br>Share<br>Issue<br>Privatizations.7<br>_Financial_<br>_Management._29:67-77.|Overtheperiod1981-1997this study<br>examinestheperformanceof158PIPOs<br>form33countries. Theauthorscompute<br>1,3and5-yearretumsinbothlocal<br>currencyandUSdollarsandcompare<br>resultstointemational<br>and<br>national<br>indicesas well asmatchingfirmtypes.|First yearmeanholding-periodretumsforthe<sup>SIPs</sup><br>arefoundtobe25.1percent,which<sup>compares</sup><br>favorablytothemean localcurrencyhome<sup>market</sup><br>retums(13.2%), FTworldIndex (13.1%)<sup>andS&P</sup><br>500Index(17.6%).TheHPRforindustry<sup>matching</sup><br>firmsisalsolessthanthatfortheSIPs(15%).<sup>This</sup><br>resultisstatistically significant forallofthe<sup>indices</sup><br>used. Similarresultsarefoundafter<sup>3 and 5years,</sup><br>withexcessretumsexceeding 80percent<sup>formost</sup><br>indices.|
|Megginson,WilliamL.,andJeffrey<br>M.Netter.<br>2001.'FromStateto<br>Market:<br>ASurvey<br>ofEmpirical<br>StudiesofPrivatization.'<br>_Mimeo._<br>ForthcominginJoumalofEconomic<br>Uterature.<br>httDo//www.aei.brookinas.ora<br>oulicatioWslrelated/rivatization.odf|Thepaper surveystherapidlygrowing<br>literatureonprivatzation,attemptsto<br>frameandanswerthekeyquestionsthis<br>streamofresearchhasaddressed,and<br>thendescribessomeofitslessonson<br>the promiseandperilsofstate-owned<br>assets.|The paper idenbfiesthe followingmainlessons<sup>from</sup><br>theliteratureonprivatization:<br>Theprivatizabonprogramsofthelast20years<sup>have</sup><br>reducedtheroleofSOEsintheeconomiclife of<sup>most</sup><br>countries.Mostofthisreducton<br>indeveloping<br>countrieshastaken placeonlyinthe1990s.<sup>The</sup><br>SOEshareof'globalGDP"hasdeclinedfrom more<br>than10percentin1979toless than6<sup>percenttoday.</sup><br>Privatelyownedfirmsaremoreefficientand more<br>profitablethancomparable state-owned<sup>firms.There</sup><br>islimitedempiricalevidence,especiallyfrom<sup>China,</sup><br>thatsuggeststhatnon-privatzingreform<sup>measures-</sup><br>suchaspricederegulabon,market liberalizabon,and<br>increaseduseofincenbives- can improvethe<br>efficiencyofSOEs,butitalsoseemslikely thatthese<br>reformswould beevenmoreeffectiveifcoupled with<br>pnivatzabon.|
|Nellis, John.1994.'isPrivabtzaion<br>Necessaryr<br>_PublicPolicyforthe_<br>_PrivateSectorNote_17.Washington<br>D.C.:WorldBank.|Inthis studytheauthorarguesthat<br>privabzabonisnecessary.Heargues<br>thatthereareseveralreasonswhy<br>privatefirmsperform<br>betterthanSOEs.<br>ThereIsamarketformanagersthat<br>leadstohigherqualitymanagement;<br>capitalmarketssubjectprivate firmsto<br>greaterscrutiny;they aremuchmore<br>subjecttoexitthanSOEs;politicians<br>interfere lesswiththeirrunning;and<br>private<br>firms<br>are<br>owned<br>by<br>self-<br>interested<br>shareholders<br>rather<br>than<br>'disinterestedbureaucrats'.|Thereareanumberofreformsthat could<sup>helpto</sup><br>combattheseproblemsthat donotinvolvechanging<br>theownershipofthefirm,andthereis some<br>empirical evidencetosuggest thattheycan<sup>be</sup><br>successful.<br>However<br>the<br>author<br>argues<br>that<br>ownership<br>isstill<br>the<br>bestway<br>to<br>improve<br>performance.Whileitisseenthat there<sup>maybe</sup><br>someovedapintheperformanceofprivate firmsand<br>SOEs,ingeneralprivatefirmsoutperform<br>SOEs.<br>Empirical evidence alsobackthisupwiththemajority<br>ofpre<br>andpost-privatzabon<br>studiesshowing<br>significantimprovementsinvariousfactors<sup>after</sup><br>privatzalon.Lastly. theauthor arguesthatpartial<br>reformsimplementedbygovemmentsoften amount<br>to nomore thanacompromiseandthattheyare<br>oftenpronetoreversingpolicy decisions orrelaxing<br>them. Thisissomethingthatcanbeavoidedif<br>privatizationisconducted.|