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Selling the family silver to pay the grocer's bill? The case of privatization in India

Gupta, Nandini

Using data on Indian government-owned firms, we investigate the effect of privatization on the performance of these firms. Our results suggest that privatization is positively associated with the profitability and efficiency of government-owned firms. Despite the small number of transactions, selling majority equity stakes to private owners has an economically significant impact on firm performance. Moreover, privatization is not associated with layoffs or a decline in employee compensation. These results are robust to controlling for the observable and unobservable characteristics of firms selected for privatization, and industry and country level reforms.

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Academic Units
Program on Indian Economic Policies
Publisher
School of International and Public Affairs, Columbia University
Series
Program on Indian Economic Policies Working Papers, 2010-2
Published Here
August 3, 2011
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