Privatization and Financial Performance: Can Value Be Created by Privatizing State Owned Enterprises in the Middle East & North Africa (MENA) Region?
Journal of Business Valuation and Economic Loss Analysis, Berkeley Electronic Press, Vol. 3, No. 1, 2008
22 Pages Posted: 25 Sep 2008 Last revised: 8 Jan 2013
Date Written: January 18, 2008
This study investigates the impact of privatization on value creation in State Owned Enterprises (SOEs) in the Middle East and North Africa (MENA) region. A multi-case study approach, using quantitative and qualitative data, is used to rectify the findings of prior SOE privatization research by taking a finer-grained analysis into the conditions that determine post-privatization performance. This study addresses the research question, "What is the effect of privatization in terms of value creation for State Owned Enterprises in the Middle East and North Africa (MENA) region?" Value creation is measured in terms of profitability, operating efficiency, capital expenditures, and leverage. Using quantitative performance metrics to assess value creation, we also use qualitative data to show that post-privatization value creation depends on specific strategic initiatives as well as government policy toward competition. Our overall conclusion is that privatizing SOEs can be beneficial in the MENA region but must coincide with strong government reform policies, and certain financial and managerial strategies.
Keywords: MENA, Privatization, SOE, Restructuring, and Value Creation
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