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PRIVATISING NATIONAL OIL COMPANIES: ASSESSING THE IMPACT ON FIRM PERFORMANCE - page 22 / 30

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heterogeneity, which we attempt to capture through a number of additional dummy

and interaction variables. We also introduce variables for the percentage of state

ownership and for the timing of the control transfer to private shareholders. As was

the case for the initial SIPs, unit effects again are shown to be significant and,

therefore, a fixed-effect model with cluster-robust standard errors is estimated.

Perfit = αi + β1 L.Govt%it + β2 L.CtrTransit + β3 Yearit + γ Oilit + δm Post(m)it

  • +

    µn [Post(n)*Year]it + εit ;

where:

  • ‘Perf’ is the relevant performance metric,

  • ‘L.Govt%’ is the lagged percentage ownership of the home government,

  • ‘L.CtrTrans’ is a lagged dummy variable for the periods with majority voting control transferred to private investors,

  • ‘Year’ is a discrete variable, ranging from 1 to 19,

  • ‘Oil’ is a control variable for the oil price in real terms,

  • ‘Post(m)’, for m=1 to 5, is a dummy variable for the years post the public share offerings 1 to 5, respectively,

  • ‘Post(n)*Year’, for n=1 to 5, is a slope dummy variable.

Lagged values of government ownership and control transfer were found to be of

greater significance than their non-lagged counterparts. Table 6 shows the detailed

regression results for the key performance metrics. The only significant effect of

higher government ownership is to increase employment intensity of the firm, which

is also significantly positive related to government control. Both findings support the

notion that excess employment is the most prominent inefficiency of NOCs. But the

impact of government ownership on all other performance metrics is non-significant

and, based on the sign of the coefficients, generally mixed.

The point estimates and significance levels for the underlying yearly performance

trend, the initial SIP, and oil prices are very much in line with the results of the seven-

year model. As to the follow-on offerings and their corresponding trend interaction

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