Asian Journal of Research in Banking and Finance
Year : 2013, Volume : 3, Issue : 12
First page : ( 118) Last page : ( 144)
Online ISSN : 2249-7323.

Investigating the Effects of Privatization on Profitability

Aghouei Mahdi Vakilian

Faculty Member, University of Imam Reza, Iran

Online published on 7 December, 2013.

Abstract

The main objectives of privatization are determined based on the policies, economic plans and general strategies of any country. Among privatization objectives in Iran are including financial and managerial burden of the government in economic activities and efficiency increase. Reducing governmental intervention in economic affairs is followed by the goal of giving economic nature to the governmental enterprises, dominating financial regulations in the market and enterprises to increase their efficiency from one hand; increase competition and accelerating national economy's growth from the other hand. A privatization question may arise that One important question in this field is the extent to which privatization has been successful in all of these countries. Many current are employed for measuring the accomplishments of privatization. Meanwhile, the study measures the performance of the companies before and after privatization, by using profitability criteria. To measure the effects of privatization on firms’ profitability, 4 variables including earnings before interest and tax modified based on inflation index, return on sales, return on assets and return on equity of privatized firms 3 years before and after privatization calculated. Then, according to the normality or non-normality of the data for comparing data before and after privatization, paired comparisons and Wilcoxon test employed. The results showed that privatization does not effect on the profitability of the Iranian firms.

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Keywords

Privatization, Profitability.

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