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Does Privatization Increase Firm Performance in Nigeria?: An Empirical Investigation

Ojonugwa Usman () and Joseph O. Olorunmolu

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examined the validity of the efficacy of privatization by investigating not only whether privatization has improved financial (profitability) performance of firms but also whether such improvement has impact on the operational efficiency of privatized firms for the period 1990-2001 in Nigeria. Using a panel data for a sample of 20 privatized firms obtained from the Nigerian Stock Exchange and Securities and Exchange Commission, the result showed an increase in all the profitability ratios after privatization. However, only the return on assets and return on sales were significant in explaining the difference between pre- and post-privatization performance of firms in Nigeria. The result of the operational efficiency showed a significant increase in the mean (median) values of sale efficiency and income efficiency. Interestingly, while output (real sales) and employee income of firms significantly increased after privatization, the number of employees decreased insignificantly after privatization. The paper concluded that privatization in Nigeria has worked in the sense that it improves the financial and operational efficiency performance of firms.

Keywords: Privatization; Firm performance; Operational Efficiency; Profitability; Nigerian Stock Exchange (search for similar items in EconPapers)
JEL-codes: L32 (search for similar items in EconPapers)
Date: 2015-10-03, Revised 2016-03-01
New Economics Papers: this item is included in nep-afr, nep-bec, nep-cse and nep-eff
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