corroborate the robustness of the results. The paper has not attempted to empirically
distinguish the impact of privatisation from corporatisation of the NOC (Aivaziana et
al. 2005), or from market liberalisation (Vickers and Yarrow 1988).23 Finally, we are
primarily concerned with the extent of performance changes rather than the sources of
change, i.e. particular firm-level governance or institutional settings.
The global oil and gas industry has been one of the key contributing industries to
privatisation revenues since the late 1970s. Despite their economic and political
importance there has been limited research on the performance and efficiency of
NOCs, whilst the question of resource ownership has regained widespread attention.
This study on the performance impact of privatisation of NOCs therefore addresses a
number of important, yet unanswered questions.
We first analysed the performance impact of initial SIPs using univariate tests and
panel data regression analysis. Univariate tests are an intuitive but simple approach,
whereas panel regression can control for exogenous factors and yield important
insights into the time pattern of performance change. Both approaches yield consistent
and compelling evidence that privatisation of NOCs is indeed associated with higher
firm profitability, (commercial) efficiency, capital investment, output and dividend
payments, as well as with lower financial leverage and employment. There is no
direct evidence, though, of improved operating cost structures or hydrocarbon reserve
replacement. The observed changes are found to be largely firm-specific to the
privatised NOCs rather than being driven by industry-wide developments, and there is
no indication of undue “window dressing” of accounts prior to the transactions. Based
23 Furthermore, the possibility of reverse causation needs to be acknowledged. It is possible that at least some of the companies in the sample have been selected for privatisation because of a significant growth potential, which needed to be funded through the capital markets.