The Financial and Operating Performance ofPrivatized Firms in Sweden

This paper examines the change in operating and financial performance of Swedish firmsthat were either partly or fully privatized during the period of 1989-2007. Two differentmethods are used to empirically investigate the performance of privatized firms. First,accounting data prior to and after the privatization are employed to measure the operatingperformance of privatized firms. We have found no significant difference in performancesunder state and private ownerships. Second, a return-based event study is found useful tomeasure the financial performance of privatized firms, since all the firms in the sample thatwere privatized have used an initial public offering (IPO). This approach allows comparison tothe rest of the IPOs that were launched in the same period. It is found that the cumulativereturns for the privatized firms are significantly different to private counterparts. Overallresults, however, show that the privatization in Sweden was not as successful as it mighthave been expected and in comparison with those in other countries....