Privatisation does not always work - an empirical study of Malaysia share issue privatisation

Abstract

This study compares the pre- and post-privatisation financial and operating performance of a sample of 24 firms, which were privatised and listed in Malaysia over the period from 1983 to 1999. Contrary to the results of the directly comparable, multi-country studies of Megginson, Nash, and van Randenborgh (1994), Boubakri and Cosset (1998), and D'Souza and Megginson (1999), this study does not document any significant increases in profitability and dividend payments upon privatisation. However, consistent with these studies, we find significant increases in output and, to a lesser extent, decline in leverage. Such results prompt us to query what exactly makes privatisation work.