Performance of telecoms privatised under different modes and structures: A comparison of New Zealand and Australian telecoms
International Journal of Public Sector Management
ISSN: 0951-3558
Article publication date: 28 August 2009
Abstract
Purpose
This paper aims to examine whether the mode of privatisation and the subsequent ownership structure affects post‐privatisation performance.
Design/methodology/approach
Utilising a theoretically derived sample of two matched telecommunications firms in New Zealand and Australia, and non‐parametric analysis of financial data, the performance of two forms of privatisation are compared: full privatisation via direct sale to foreign anchor investors versus partial privatisation via a domestic share issue restricting foreign ownership.
Findings
Concentrated ownership through direct sales to foreign owned anchor investors is not more efficient or profitable, nor does it result in increased capital investment; it does, however, result in higher dividend payouts.
Research limitations/implications
These findings contradict the accepted wisdom and dominant theory in the field that full privatisation outperforms partial privatisation, and that FDI transfers firm‐specific ownership advantages enabling the recipient to outperform domestically owned firms. However, the findings are applicable to the two firms and countries studied and future studies need to extend these to the wider population of privatised firms.
Practical implications
While privatisation will improve organisational performance, the choice of whether to privatise by direct sale to anchor investors and foreign owners versus a partial share issue privatisation and keeping a domestic focus will have post‐privatisation performance implications.
Originality/value
A more nuanced understanding is provided of the performance implications of modes of divestiture and ownership structures in advanced economies.
Keywords
Citation
Domney, M.D. (2009), "Performance of telecoms privatised under different modes and structures: A comparison of New Zealand and Australian telecoms", International Journal of Public Sector Management, Vol. 22 No. 6, pp. 555-575. https://doi.org/10.1108/09513550910982896
Publisher
:Emerald Group Publishing Limited
Copyright © 2009, Emerald Group Publishing Limited