The effects of privatisation on the financial management: a case study
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Published
18-09-2018
Koldo Zabalza Miera
Jesús Matey de Antonio
Abstract
The privatisation of a firm entails a thoroughgoing process of reform that includes the introduction of new management practices. A review of the theoretical and empirical studies conducted allows us to confirm that a systematic analysis of the change in management that arise after a public company's privatisation does not exist. This study explores the changes in financial management that take place after a public company's privatization and proposes relevant factors in three performance areas of financial management (financial structure, investment decision and financial planning). In order to confirm the theoretical propositions posed, we used contemporary multiple case studies as a research methodology. In particular, the changes experienced in the financial management area in four privatised Spanish companies were investigated along the lines of a longitudinal analysis. The results of this study show that most theoretical propositions are confirmed and conclude that the three areas considered are relevant to the process of change in a privatised firm´s financial management.
How to Cite
Zabalza Miera, K., & Matey de Antonio, J. (2018). The effects of privatisation on the financial management: a case study. Cuadernos De Gestión, 10(2), 81–98. https://doi.org/10.5295/cdg.100214kz
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Keywords
Privatisation, changes in management, financial management, case study
References
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ARCAS, M. J. y RUIZ, F. J. (1999): “Los efectos de la privatización de empresas sobre su comportamiento económico y financiero: el caso de Repsol”. Hacienda Pública Española, 149, pp. 21-33.
ARIAS, M. (2003): “Metodologías de investigación emergentes en economía de la empresa”, Papers Proceedings 2003, XVII congreso nacional XIII congreso hispano-francés AEDEM, Université Montesquieu Bordeaux IV, Bordeaux, pp. 19-28.
ATKINSON, S.E. and HALVORSEN, R. (1986): “The relative efficiency of public and prívate firms in a regulated environment: the case of US electric utilities”, Journal of Public Economics, 29, pp. 281-294.
BOARDMAN, A.E.; LAURIN, C. and VINING, A.R. (2003): “Privatization in North America”, in David Parker and David Saal (eds.) International Handbook on Privatisation, Edward Elgar, Cheltenham, U.K., pp. 129-160.
BOUBAKRI, N. and COSSET, J.C. (1998): “The financial and operating performance of newly privatised firms: evidence from developing countries”, Journal of Finance, 53(3), pp. 1081-1110.
BOUBAKRI, N. and HAMZA, O. (2007): “The dynamics of privatization, the legal environment and stock market development”, International Review of Financial Analysis, 16(4), pp. 304-331.
BOUBAKRI, N.; COSSET, J.C. and GUEDHAMI, O. (2005): “Liberalization, corporate governance and the performance of privatized firms in developing countries”, Journal of Corporate Finance, 11, pp. 767–790.
BOYCKO, M.; SHLEIFER, A. and VISHNY, R. (1996): “A theory of privatization”, Economic Journal, 106, pp. 309-319.
BRADLEY, M.; JARREL, G. y KIM, E. H. (1984): “On the existence of an optimal capital structure: Theory and evidence”. Journal of Finance, vol. 39, pp. 857-878.
BREALEY, R. A. y MYERS, S. C. (1995): Fundamentos de financiación empresarial. McGrawHill, Madrid.
BRUGGINK, T.H. (1982): “Public versus regulated private enterprise in the municipal water industry: a comparison of operating costs”, Quarterly Review of Economics and Business, 22(1), pp. 111-125.
BURNS, P. and WEYMAN-JONES, T. (1994): Regulatory incentives, privatisation and productivity growth in UK electricity distribution, CRI Technical Paper 1, Centre for the Study of Regulated Industries, London, Chartered Institute of Public Finance and Accountancy.
CHIVA, R. (2001): “El estudio de casos explicativo. Una reflexión”. Revista de Economía y Empresa, vol. XV, nº 41, pp. 119-132.
CUERVO, A. (2004): “Empresa pública y privatización”, Papeles de Economía Española, 100, pp. 147-160.
D´SOUZA, J. and MEGGINSON, W.L. (1999): “The financial and operating performance of newly privatized firms during the 1990s”, Journal of Finance, 54(4), pp. 1397-1438.
D´SOUZA, J.; MEGGINSON, W.L. and NASH, R. (2005): “Effects of institutional and firm specific characteristics on post-privatization performance: Evidence from developed countries”, Journal of Corporate Finance, 11(5), pp. 747–766.
DEWENTER, K. and MALATESTA, P.H. (2000): “State-owned and privately-owned firms: an empirical analysis of profitability, leverage and labour intensity”, American Economic Review, 91(1), pp. 320-334.
DI LORENZO, T.J. and ROBINSON, R. (1982): “Managerial objectives subject to political market constraints: electric utilities in the US”, Quarterly Review of Economics and Business, 22(2), pp. 113-125.
DURÁN, J. J. (2004): “Las empresas multinacionales privatizadas. Especial referencia al caso español” en VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 833-855.
ECKEL, C.; ECKEL, D. and SINGAL, V. (1997): “Privatization and efficiency: Industry effects of the sale of British Airways”, Journal of Financial Economics, 43, 275-298.
EISENHARDT, K.M. (1989): “Building theories from case study research”, Academy of Management Review, 14, pp. 532-550.
EISENHARDT, K.M. (1991): “Better Stories and Better Constructs: The Case for Rigor and Comparative Logic”, Academy of Management Review, 16(3), pp. 620-627.
EISENHARDT K.M. and GRAEBNER M.E. (2007): “Theory building from cases: opportunities and challenges”, Academy of Management Journal, 50(1), pp. 25–32.
ESTRIN, S. (2002): “Competition and corporate governance in transition”, Journal of Economics Perspectives, 16(1), pp. 101-124.
FOREMAN-PECK, J. (1989): Ownership, competition and productivity growth: the impact of liberalisation and privatisation upon British Telecom. Warwick Economic Research Papers Series (TWERPS), nº 338, University of Warwick.
FOREMAN-PECK, J. and WATERSON, M. (1985): “The comparative efficiency of public and private enterprise in Britain: electricity generation between the world wars”, The Economic Journal, 95, pp. 83-95.
GARCÍA, M.T. y MARIZ, R.M. (2003): El efecto de las privatizaciones sobre la gestión empresarial. AEDEM, XVII Congreso Nacional y XIII Congreso Hispano-Francés, Bordeaux, pp. 1087-1096.
GIBBERT, M.; RUIGROK, W. and WICKI, B. (2008): “What passes as a rigorous case study?”, Strategic Management Journal, 29, pp. 1465-1474.
GÓMEZ, M. y GARCÍA, A. (2004): “La privatización y el aumento de competitividad de las empresas españolas”, in VV. AA., Teoría y política de privatisaciones: su contribución a la moderniiación económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 857-877.
GONZÁLEZ-PÁRAMO, J. M. y HERNÁNDEZ DE COS, P. (2004): “La evolución económicofinanciera de las empresas privatizadas, 1983-1996”, en VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 655-670.
IRANZO, J.E. (2004): “De la empresa estatal a la multinacional: el papel de las antiguas empresas de propiedad pública en la expansión de la economía española” in VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 813-832.
LAFFONT, J. J. y TIROLE, J. (1993): A theory of incentives in procurement and regulation. MIT Press, Cambridge, Massachusetts.
LAURIN, C. and BOZEC, Y. (2001): “Privatization and productivity improvement: the case of Canadian National”, Transportation Research Part E: Logistics and Transportation Review, 37(5), pp. 355-374.
LYNK, E.L. (1993): “Privatisation, joint production and the comparative efficiencies of private and public ownership: the UK water industry case”, Fiscal Studies, 14(2), pp. 98-116.
MARTIN, S. and PARKER, D. (1995): “Privatization and economic performance throughout the UK business cycle”, Managerial and Decision Economics, 16, pp. 225-237.
MEGGINSON, W. L. (2004): “Los efectos macroeconómicos de la privatización”, en VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, SEPI, Ed. Cinca, Madrid, pp. 391-444.
MEGGINSON, W.L.; NASH, R.C. and RANDENBORGH, M.Van. (1994): “The financial and operating performance of newly privatized firms: an international empirical analysis”, Journal of Finance, 49(2), pp. 403-452.
MEGGINSON, W.L.; NASH, R.C.; NETTER, J. and POULSEN, A. (2004): “The choice of private versus public capital markets: evidence from privatizations”, Journal of Finance, 59(6), pp. 2835–2870.
MILLWARD, R.E. and PARKER, D.M. (1983): “Public and Private Enterprise: Comparative Behaviour and Relative Efficiency” in Robert Millward, Parker, Rosenthal, Sumner and Topham (eds.) Public Sector Economics. Longman, New York, pp. 199-274.
MILLWARD, R. and WARD, R. (1987): “The costs of public and private gas enterprises in late 19th century Britain”, Oxford Economic Papers, 39, pp. 719-737.
PARKER, D. and KIRKPATRICK, C. (2005): “Privatisation in developing countries: A review of the evidence and the policy lessons”, Journal of Development Studies, 41(4), pp. 513-541.
PRYKE, R. (1982): “The comparative performance of public and private enterprise”, Fiscal Studies, 3(2), pp. 68-81.
RONDINELLI, D.A. (2004): “Políticas e instituciones para dirigir el proceso de privatización: la experiencia internacional” in VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 115-141.
SHLEIFER, A. and VISHNY, R. (1994): “Politicians and firms”. Quarterly Journal of Economics, vol. 109, nº 4, pp. 995-1025.
SIGGELKOW, N. (2007): “Persuasion with case studies”, Academy of Management Journal, 50(1), pp. 20–24.
SOSA, S. (2006): La génesis y el desarrollo del cambio estratégico: un enfoque dinámico basado en el momentum organizativo. Tesis doctoral, U. Las Palmas de G. Canaria.
TIAN, G.L. (2000): State shareholding and corporate performance: a study of a unique Chinese data set, Working Paper, London Business School.
VILLARREAL, O. (2007): La Estrategia de Internacionalización de la Empresa. Un Estudio de Casos de Multinacionales Vascas, Tesis Doctoral, Universidad del País Vasco-Euskal Herriko Unibertsitatea, Bilbao.
YIN, R. K. (1989): Case study research: design an methods. Sage Publications, London.
YIN, R.K. (1993): Applications of case study research. Newbury Park, Sage Publications, London.
YIN, R.K. (1994): Case study research. Design and methods (2ª ed.). Newbury Park, Sage Publications, London.
YIN, R.K. (1998): “The Abridged Version of Case Study Research”, in Bickman, L. and Rog, D. J. (eds.): Handbook of Applied Social Research Methods, Sage Publications, Thousand Oaks, pp. 229-259.
ZAHRA, S.A.; IRELAND, R.D.; GUTIERREZ, I. and HITT, M.A. (2000): “Privatization and entrepreneurial transformation: emerging issues and a future research agenda”, Academy of Management Review, 25(3), pp. 509-524.
ARCAS, M. J. y RUIZ, F. J. (1999): “Los efectos de la privatización de empresas sobre su comportamiento económico y financiero: el caso de Repsol”. Hacienda Pública Española, 149, pp. 21-33.
ARIAS, M. (2003): “Metodologías de investigación emergentes en economía de la empresa”, Papers Proceedings 2003, XVII congreso nacional XIII congreso hispano-francés AEDEM, Université Montesquieu Bordeaux IV, Bordeaux, pp. 19-28.
ATKINSON, S.E. and HALVORSEN, R. (1986): “The relative efficiency of public and prívate firms in a regulated environment: the case of US electric utilities”, Journal of Public Economics, 29, pp. 281-294.
BOARDMAN, A.E.; LAURIN, C. and VINING, A.R. (2003): “Privatization in North America”, in David Parker and David Saal (eds.) International Handbook on Privatisation, Edward Elgar, Cheltenham, U.K., pp. 129-160.
BOUBAKRI, N. and COSSET, J.C. (1998): “The financial and operating performance of newly privatised firms: evidence from developing countries”, Journal of Finance, 53(3), pp. 1081-1110.
BOUBAKRI, N. and HAMZA, O. (2007): “The dynamics of privatization, the legal environment and stock market development”, International Review of Financial Analysis, 16(4), pp. 304-331.
BOUBAKRI, N.; COSSET, J.C. and GUEDHAMI, O. (2005): “Liberalization, corporate governance and the performance of privatized firms in developing countries”, Journal of Corporate Finance, 11, pp. 767–790.
BOYCKO, M.; SHLEIFER, A. and VISHNY, R. (1996): “A theory of privatization”, Economic Journal, 106, pp. 309-319.
BRADLEY, M.; JARREL, G. y KIM, E. H. (1984): “On the existence of an optimal capital structure: Theory and evidence”. Journal of Finance, vol. 39, pp. 857-878.
BREALEY, R. A. y MYERS, S. C. (1995): Fundamentos de financiación empresarial. McGrawHill, Madrid.
BRUGGINK, T.H. (1982): “Public versus regulated private enterprise in the municipal water industry: a comparison of operating costs”, Quarterly Review of Economics and Business, 22(1), pp. 111-125.
BURNS, P. and WEYMAN-JONES, T. (1994): Regulatory incentives, privatisation and productivity growth in UK electricity distribution, CRI Technical Paper 1, Centre for the Study of Regulated Industries, London, Chartered Institute of Public Finance and Accountancy.
CHIVA, R. (2001): “El estudio de casos explicativo. Una reflexión”. Revista de Economía y Empresa, vol. XV, nº 41, pp. 119-132.
CUERVO, A. (2004): “Empresa pública y privatización”, Papeles de Economía Española, 100, pp. 147-160.
D´SOUZA, J. and MEGGINSON, W.L. (1999): “The financial and operating performance of newly privatized firms during the 1990s”, Journal of Finance, 54(4), pp. 1397-1438.
D´SOUZA, J.; MEGGINSON, W.L. and NASH, R. (2005): “Effects of institutional and firm specific characteristics on post-privatization performance: Evidence from developed countries”, Journal of Corporate Finance, 11(5), pp. 747–766.
DEWENTER, K. and MALATESTA, P.H. (2000): “State-owned and privately-owned firms: an empirical analysis of profitability, leverage and labour intensity”, American Economic Review, 91(1), pp. 320-334.
DI LORENZO, T.J. and ROBINSON, R. (1982): “Managerial objectives subject to political market constraints: electric utilities in the US”, Quarterly Review of Economics and Business, 22(2), pp. 113-125.
DURÁN, J. J. (2004): “Las empresas multinacionales privatizadas. Especial referencia al caso español” en VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 833-855.
ECKEL, C.; ECKEL, D. and SINGAL, V. (1997): “Privatization and efficiency: Industry effects of the sale of British Airways”, Journal of Financial Economics, 43, 275-298.
EISENHARDT, K.M. (1989): “Building theories from case study research”, Academy of Management Review, 14, pp. 532-550.
EISENHARDT, K.M. (1991): “Better Stories and Better Constructs: The Case for Rigor and Comparative Logic”, Academy of Management Review, 16(3), pp. 620-627.
EISENHARDT K.M. and GRAEBNER M.E. (2007): “Theory building from cases: opportunities and challenges”, Academy of Management Journal, 50(1), pp. 25–32.
ESTRIN, S. (2002): “Competition and corporate governance in transition”, Journal of Economics Perspectives, 16(1), pp. 101-124.
FOREMAN-PECK, J. (1989): Ownership, competition and productivity growth: the impact of liberalisation and privatisation upon British Telecom. Warwick Economic Research Papers Series (TWERPS), nº 338, University of Warwick.
FOREMAN-PECK, J. and WATERSON, M. (1985): “The comparative efficiency of public and private enterprise in Britain: electricity generation between the world wars”, The Economic Journal, 95, pp. 83-95.
GARCÍA, M.T. y MARIZ, R.M. (2003): El efecto de las privatizaciones sobre la gestión empresarial. AEDEM, XVII Congreso Nacional y XIII Congreso Hispano-Francés, Bordeaux, pp. 1087-1096.
GIBBERT, M.; RUIGROK, W. and WICKI, B. (2008): “What passes as a rigorous case study?”, Strategic Management Journal, 29, pp. 1465-1474.
GÓMEZ, M. y GARCÍA, A. (2004): “La privatización y el aumento de competitividad de las empresas españolas”, in VV. AA., Teoría y política de privatisaciones: su contribución a la moderniiación económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 857-877.
GONZÁLEZ-PÁRAMO, J. M. y HERNÁNDEZ DE COS, P. (2004): “La evolución económicofinanciera de las empresas privatizadas, 1983-1996”, en VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 655-670.
IRANZO, J.E. (2004): “De la empresa estatal a la multinacional: el papel de las antiguas empresas de propiedad pública en la expansión de la economía española” in VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 813-832.
LAFFONT, J. J. y TIROLE, J. (1993): A theory of incentives in procurement and regulation. MIT Press, Cambridge, Massachusetts.
LAURIN, C. and BOZEC, Y. (2001): “Privatization and productivity improvement: the case of Canadian National”, Transportation Research Part E: Logistics and Transportation Review, 37(5), pp. 355-374.
LYNK, E.L. (1993): “Privatisation, joint production and the comparative efficiencies of private and public ownership: the UK water industry case”, Fiscal Studies, 14(2), pp. 98-116.
MARTIN, S. and PARKER, D. (1995): “Privatization and economic performance throughout the UK business cycle”, Managerial and Decision Economics, 16, pp. 225-237.
MEGGINSON, W. L. (2004): “Los efectos macroeconómicos de la privatización”, en VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, SEPI, Ed. Cinca, Madrid, pp. 391-444.
MEGGINSON, W.L.; NASH, R.C. and RANDENBORGH, M.Van. (1994): “The financial and operating performance of newly privatized firms: an international empirical analysis”, Journal of Finance, 49(2), pp. 403-452.
MEGGINSON, W.L.; NASH, R.C.; NETTER, J. and POULSEN, A. (2004): “The choice of private versus public capital markets: evidence from privatizations”, Journal of Finance, 59(6), pp. 2835–2870.
MILLWARD, R.E. and PARKER, D.M. (1983): “Public and Private Enterprise: Comparative Behaviour and Relative Efficiency” in Robert Millward, Parker, Rosenthal, Sumner and Topham (eds.) Public Sector Economics. Longman, New York, pp. 199-274.
MILLWARD, R. and WARD, R. (1987): “The costs of public and private gas enterprises in late 19th century Britain”, Oxford Economic Papers, 39, pp. 719-737.
PARKER, D. and KIRKPATRICK, C. (2005): “Privatisation in developing countries: A review of the evidence and the policy lessons”, Journal of Development Studies, 41(4), pp. 513-541.
PRYKE, R. (1982): “The comparative performance of public and private enterprise”, Fiscal Studies, 3(2), pp. 68-81.
RONDINELLI, D.A. (2004): “Políticas e instituciones para dirigir el proceso de privatización: la experiencia internacional” in VV. AA., Teoría y política de privatizaciones: su contribución a la modernización económica. Análisis del caso español, Fundación SEPI, Ediciones Cinca, Madrid, pp. 115-141.
SHLEIFER, A. and VISHNY, R. (1994): “Politicians and firms”. Quarterly Journal of Economics, vol. 109, nº 4, pp. 995-1025.
SIGGELKOW, N. (2007): “Persuasion with case studies”, Academy of Management Journal, 50(1), pp. 20–24.
SOSA, S. (2006): La génesis y el desarrollo del cambio estratégico: un enfoque dinámico basado en el momentum organizativo. Tesis doctoral, U. Las Palmas de G. Canaria.
TIAN, G.L. (2000): State shareholding and corporate performance: a study of a unique Chinese data set, Working Paper, London Business School.
VILLARREAL, O. (2007): La Estrategia de Internacionalización de la Empresa. Un Estudio de Casos de Multinacionales Vascas, Tesis Doctoral, Universidad del País Vasco-Euskal Herriko Unibertsitatea, Bilbao.
YIN, R. K. (1989): Case study research: design an methods. Sage Publications, London.
YIN, R.K. (1993): Applications of case study research. Newbury Park, Sage Publications, London.
YIN, R.K. (1994): Case study research. Design and methods (2ª ed.). Newbury Park, Sage Publications, London.
YIN, R.K. (1998): “The Abridged Version of Case Study Research”, in Bickman, L. and Rog, D. J. (eds.): Handbook of Applied Social Research Methods, Sage Publications, Thousand Oaks, pp. 229-259.
ZAHRA, S.A.; IRELAND, R.D.; GUTIERREZ, I. and HITT, M.A. (2000): “Privatization and entrepreneurial transformation: emerging issues and a future research agenda”, Academy of Management Review, 25(3), pp. 509-524.
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