Employment: Numbers of employees, relative change in employment, employees over assets.
Financial leverage: debt over equity, debt over capital, debt over EBITDA.
Dividend payment: dividends over net profit, dividends over sales. In computing sales, sales per employee, income per employee, F&D costs,
production costs and capex the nominal monetary values are deflated using the IMF’s
Consumer Price Index.11 All per-employee metrics, F&D costs, production costs,
capex, sales, physical output, relative employment and employees over assets are
“normalised” to the value of 1.0 in the year of privatisation, with the other years
expressed relative to unity.
Although all metrics convey useful information, some are less susceptible to
technical or price volatility and are therefore ‘preferred’ choices: return on sales,
physical output (total and per employee, rather than monetary sales), production costs
per barrel (rather than F&D cost or RRR), balance sheet gearing (rather than cash
flow multiples) and dividend over income are some of these first choice metrics.
Capital expenditure is the result of mid-term financial planning, so the ratio of capex
over assets as well as capex itself are informative. Finally, the labour intensity ratio of
employees over assets is useful if there have been major divestments or acquisitions.
Pre- vs. post-privatisation
For each firm we calculate the means and medians of the 22 empirical proxies for
the pre-privatisation (-3 to –1 years) and post-privatisation (+1 to +3 years) period.
The values and their changes are reported in Table 2. A non-parametric test, the one-
sided Wilcoxon signed-rank test, is then employed to test whether the median
11 Balance sheet items and ratios of flow measures over balance sheet items are nominal values. Ratios based on inflation-adjusted balance sheet figures have been calculated as a cross-check.