Understanding Post-Privatisation Performance of Statutory Bodies Subject to Government Shareholding—A Suggested Theoretical Framework, for Malaysian Researchers

Philip Sinnadurai and Susela Devi
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Philip Sinnadurai: Independent Researcher, Sydney, NSW 2122, Australia
Susela Devi: Sunway University Business School, Sunway University, No. 5 Jalan Universiti, Bandar Sunway 47500, Selangor Darul Ehsan, Malaysia

JRFM, 2022, vol. 15, issue 5, 1-15

Abstract: The purpose of this concept paper is to suggest a theoretical framework for understanding the post-privatisation performance of statutory bodies, subject to government shareholding. We identify a suitable model, from the analytical economics literature. We argue that this model is a manifestation of agency theory. Our proposed framework for using this theory is replete with examples from Malaysia. We conclude that in Malaysia, the principal determinant of whether government subsidisation enhances or erodes shareholder wealth is the level of government shareholding. We also predict that in Malaysia, the relation between shareholder wealth and government shareholding follows an “inverted U” shape. However, the turning is likely to vary, cross-sectionally and temporally. We believe that the framework presented within this paper can be used to understand empirical results reported by other Malaysian studies into the shareholder wealth effects arising from economic policies featuring close co-operation between the public and private sectors.

Keywords: government subsidisation; analytical economics; public policy; shareholder wealth (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
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