IMPACT OF PRIVATISATION ON FINANCIAL PERFORMANCE AND EFFICEINCY OF STATE OWNED ENTERPRISES

Abstract

Purpose: This study designed for inspecting the potential effect of privatization on the financial performance and efficiency of the Cement Sector (Kohat Cement Company and Dandot Cement Company), Oil and Gas Sector (PPL and NRL) and Service Sector (PTCL and KESC). This research is an effort to contribute in the discussion on how privatization of state- owned enterprises may impact on the financial performance and efficiency of these enterprises. Data and Methodology: The data were obtained from the State Bank library of Pakistan, Official websites of selected companies, Security and Exchange Commission of Pakistan and Karachi Stock Exchange of five years pre and five years post-privatization. Moreover, Paired t-test applied for determining and comparing the significant differences among companies’ financial performances and their efficiency levels, under before and after privatization periods. Findings: The findings revealed that privatization has an insignificant impact on Cement Sector, as well as, on Service Sector. However, there is a significant impact of privatization Oil and Gas Sector documented in this research. Recommendations: Furthermore, instead of privatizing companies, the government of Pakistan should accept the skills of individual persons and understand that they can resolve issues more brilliantly as compared to the third party.