The Impact of Privatisation: Ownership and Corporate Performance in the UK

The Impact of Privatisation: Ownership and Corporate Performance in the UK

The Impact of Privatisation: Ownership and Corporate Performance in the UK

The Impact of Privatisation: Ownership and Corporate Performance in the UK

Synopsis

The experiences of eleven newly privatised companies are examined to evaluate the hypothesis that resources are allocated more efficiently through private ownership than through the public sector.

Excerpt

Raising the efficiency with which resources are used has been a major goal of privatisation in the uk and elsewhere. John Moore, the Financial Secretary to the Treasury from 1983 to 1986 and responsible for planning a number of key privatisations in the uk, has claimed that the benefits from privatisation are widespread:

Begun as a radical experiment, privatisation works so well that it has become a practical process by which a state-owned industry can join the free market with visible, often dramatic gains for the industry, its employees, its customers, and for the citizens who set it free by purchasing its shares.

(Moore, 1992, pp. 115-16)

At the same time, however, earlier empirical work, by ourselves and others, detailed in chapter 4, has questioned whether there is any simple relationship between ownership form and performance.

This book is concerned with assessing the impact of privatisation on eleven major firms transferred to the private sector in the uk in the 1980s using a number of different performance measures. Various indicators were chosen to see how sensitive the results are to the precise measure used. the study identifies performance changes over particular time periods based on the final years in state ownership, the decision to privatise and the years following privatisation. the study also covers the performance of the firms over a complete business cycle, including the recession of 1989-92. a number of the firms were privatised in the mid-1980s at a time of economic expansion. It is of interest to consider their performance during not only these years but also the more difficult economic period from 1989. in this part of the study an attempt is made to control for the effects of the business cycle on performance.

Earlier versions of some of the empirical work reported in this book have been published in a number of journals, namely: Scottish Journal of Political Economy, Managerial and Decision Economics, British Journal of Management, Public Money and Management, Review of Policy Issues and

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