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Leviathan resists: the endogenous relationship between privatization and firm performance

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Abstract

Using a panel dataset of privatized cement firms in Turkey, this paper models and finds support for the simultaneous relationship between privatization and firm performance. It is found that favorable short-run performance, weak market potential, higher employment, lower socio-economic development, concentrated voter preferences, and weaker representation of right-wing parties in the firms’ locality delay the timing of privatization. The paper also finds that privatization increases output in the medium-term by reducing the labor stock and promoting the adoption of more advanced technology, such that production shifts from constant to decreasing returns to scale.

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Authors and Affiliations

  1. Department of Commerce, Massey University, Auckland, New Zealand

    K. Peren Arin

  2. Centre for Applied Macroeconomic Analysis (CAMA), Canberra, Australia

    K. Peren Arin

  3. School of Accounting, Economics and Finance, Deakin University, Melbourne, Australia

    Mehmet Ali Ulubaşoğlu

Authors
  1. K. Peren Arin
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  2. Mehmet Ali Ulubaşoğlu
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Correspondence to Mehmet Ali Ulubaşoğlu.

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Arin, K.P., Ulubaşoğlu, M.A. Leviathan resists: the endogenous relationship between privatization and firm performance. Public Choice 140, 185–204 (2009). https://doi.org/10.1007/s11127-009-9418-y

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