NEW EVIDENCE ON THE PERFORMANCE OF ITALIAN PRIVATIZED FIRMS: SHOULD THE EXPERIMENT BE REPEATED IN THE AFTERMATH OF THE RECENT FINANCIAL CRISIS?

Download This Article

Abstract

We provide new evidence on the performance of privatized firms in Italy. On a large sample of 53 non-financial firms privatized from 1992 to 2005, our study shows that privatizations improve efficiency and profitability ratios, sales, and dividend payout. The most important determinant of performance and efficiency gains is the full transfer of control to private investors. Unlike the prevalent international evidence, we find that privatizations result in an increase of leverage ratio and do not affect the number of employees. Moreover, in contrast to international studies, we also find that efficiency and performance improvements are larger in firms operating in protected sectors, and that state-owned firms acquired by foreign investors do not appear to fare better after their privatization. Finally, we find that performance and efficiency gains already occur some years before the date of privatization.

Keywords: Capital Structure, Dividend Policy, Efficiency, Performance, State-owned Firm

How to cite this paper: Morresi, O., & Nobili, A. O. (2015). New evidence on the performance of Italian privatized firms: Should the experiment be repeated in the aftermath of the recent financial crisis? Corporate Ownership & Control, 12(3), 94-113. https://doi.org/10.22495/cocv12i3p9