Ownership–efficiency relationship and the measurement selection bias

Richard Bozec, Mohamed Dia and Gaétan Breton

Accounting and Finance, 2006, vol. 46, issue 5, 733-754

Abstract: This study analyses the bias in the selection of performance measures for ownership comparisons, which depends on the specific objectives of the firms being compared. Our sample includes 13 Canadian state‐owned enterprises (SOEs), commercialized and/or privatized between 1976 and 2001. To replace profitability measures and reduce biases, we propose the use of technical efficiency, which provides for SOEs’ specificities. Overall, the results clearly support the view that privatization has no impact on a firm's technical efficiency, the only positive impact being related to a change in the objectives of the firm while using profitability measures. The results of this study raise the question of the validity of comparisons between SOEs and private firms when using profitability indicators. The potential bias in favour of the private firms contributes to a misleading image of the public sector being presented as inferior and inefficient. The use of more sophisticated measures, such as data envelopment analysis, suggests conflicting conclusions. This study also casts doubt on the legitimacy of the privatization program initiated around the world and more specifically in Canada in which the main justification for such a reform has been to increase the performance of SOEs.

Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://doi.org/10.1111/j.1467-629X.2006.00194.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:46:y:2006:i:5:p:733-754

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0810-5391

Access Statistics for this article

Accounting and Finance is currently edited by Robert Faff

More articles in Accounting and Finance from Accounting and Finance Association of Australia and New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().