potential benefits from privatisation.26 Furthermore our study suggests that most of
these gains might be realised by partial privatisation alone.
Second, a more detailed analysis of the time pattern of performance changes
indicates that whilst there are immediate one-off improvements following the sale of
shares to private investors, such improvements are usually embedded within a time
trend which starts well before the actual transaction, is clearly connected to the
decision to privatise, and which for the majority of performance metrics becomes less
(rather than more) pronounced after the change in ownership. The benefits of
privatisation therefore accrue over time, and a very considerable share materialises
already in the run-up to privatisation. This very significant anticipation effect supports
earlier empirical findings of Dewenter and Malatesta (2001) and the suggestion by
Yarrow (1986) that the primary goal of privatisation may not be to achieve efficiency
gains, but to perpetuate them in the face of changing political circumstances.
Third, extending the analysis to include any follow-on share issues of the same set
of firms, it has been shown that residual government ownership in the firms and the
question of control transfer to the private sector are not significant drivers of
performance change, except for employment intensity, where higher government
ownership and government control are responsible for substantially higher
employment ratios. The number and timing of any follow-on offerings have limited
incremental explanatory power for firm performance over and above the more
general, gradual improvement process that has been modelled as a time trend.
Whilst our findings support the notion that excess employment is a prominent
inefficiency of NOCs (and correlated with the degree of state influence), most
26 This study found no evidence of privatised NOCs improving their ability to find new oil and gas reserves, so any production increase might accelerate the depletion of conventional reserves. This and potential environmental concerns would need to be traded off against shorter-term price and supply considerations.