Privatising national oil companies: Assessing the impact on firm performance

Christian Wolf and Michael Pollitt

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This study empirically investigates the impact of privatisation on firm performance in the global oil and gas industry, where questions of resource control have regained widespread attention. Using a dataset of 60 public share offerings by 28 National Oil Companies it is shown that privatisation is associated with comprehensive and sustained improvements in performance and efficiency. Over the seven-year period around the initial privatisation offering, return on sales increases by 3.6 percentage points, total output by 40%, capital expenditure by 47%, and employment intensity drops by 35%. Many of our observed performance improvements are already realised in anticipation of the initial privatisation date, accrue over time, and level off after the initial ownership change rather than accelerate. Details of residual government ownership, control transfer, and size and timing of follow-on offerings provide limited incremental explanatory power for firm performance, except for employment intensity. Based on these results partial privatisations in the oil sector might be seen to capture a significant part of the performance improvement associated with private capital markets without the selling government having to cede majority control.

Keywords: Privatisation; ownership; corporate performance; anticipation; oil and gas industry (search for similar items in EconPapers)
JEL-codes: C23 G32 L33 L71 M20 Q40 (search for similar items in EconPapers)
Pages: 24
Date: 2008-02
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cwa, nep-eff and nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: Privatising national oil companies: Assessing the impact on firm performance (2008)
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