We take stock of the performance of share issue privatizations in Australia and find that consistent with our conjecture that investors expected the privatization to significantly impact on industry counterparts through industrial repositioning, the industry counterparts reacted negatively to the privatization announcements. In the long term, the privatized firms outperformed the market index and the industry counterparts. We also find that the firms privatized by the Federal (Commonwealth) Government had significant market impact than those privatized by State Governments. In terms of operating performance, we observe that the privatized firms have become more profitable in the post privatization period than in the pre privatization period, but their operating efficiency has not significantly improved. The privatization has also led to a significant attrition in staff levels, especially in the years immediately following the year of privatization. Our results show that after controlling for contemporaneous economy-wide factors, share issue privatization has yielded significant stock market and operating performance improvements for privatized firms in Australia.

Abnormal returns, Industry competitors' reaction, Operating performance, Privatization
Sprott School of Business

Otchere, I. (2009). Privatization, competition and performance: Evidence from Australia. In Global Privatization and Its Impact (pp. 27–45).