and cuts in more or less well defined “overhead costs”, which enable a redirection of
parts of the budget towards operating assets.
Capital investment and output. The significant increases in real-terms capex and in
the ratio of capex over assets indicate a strong corporate emphasis on investment.12
92% of firms manage to increase their physical output, resulting in very significant
improvements in output and monetary sales.
Employment. Often a controversial aspect of privatisation, previous studies found
conflicting evidence as to the direction and magnitude of employment changes
(Megginson and Netter 2001). In line with this “tradition” the companies in our
sample reduce average headcount by 6,900 or 11% of staff, but this reduction is – at
least statistically – not significant. Also, 52% of firms actually increase their
headcount, so the average overall reduction is due to a minority of firms with high
numbers of redundancies.13 The highly significant reduction in the ratio of employees
over assets in any case indicates that the privatised NOCs manage to operate their
assets with much higher labour productivity.
Financial leverage and dividend payout. The results show a significant de-
leveraging of privatised NOCs, as well as a higher dividend payout ratio.
The univariate tests of NOCs corroborate the positive association of privatisation
and firm performance, but do not yet control for changes in oil prices or for changes
within a suitable control group. Also, there is no direct evidence of improvements in
production costs, or more generally in technical efficiency. Finally, the averages
frequently mask a considerable range of individual firm-level performance changes -
whilst performance improvements can be expected in the context of privatisation, they
cannot be expected in every single case.
12 13 Where disclosed, acquisitions have been excluded from capex. Most obvious are Sinopec and Petrochina, which reduced average payroll from 483,000 to 420,000 and from 512,000 to 421,000, respectively. Excluding these, average headcount reduction falls to 3.3%.