Abstract
The ownership structure (Private or Public) has strong impact on firm’s financial performance. Pakistan Telecommunication Limited (PTCL) was privatized in 2005. This research study investigates the impact of privatization on the company’s financial performance and the performance of its stock. The variables “Net Profit Margin (NPM)”, “Operating Profit Margin (OPM)”, “Return on Assets (ROA)” and “Earnings per Share (EPS)” are used as proxies for financial performance. On the other hand, the variables “Average Share price (ASP)”, “Volume of shares traded (Vol)”, and “Number of Trades (NoT)” are used as proxies for performance of stock. The paired-samples t test for mean difference has been used for comparing the pre and post privatization performance. Results indicate negative but insignificant effect of privatization on return. On the other hand, the Average Share price, Volume of shares traded, and Number of Trades are positively and significantly affected. Analysis of the financial data shows decline in the net profit margin, operating profit margins, return on assets and earnings per share after the privatization; but the impact is insignificant for all the variables except the operating profit margin
Muhammad Fahad Siddiqi.. (2010) Does Privatization Affect Performance? , Journal of Managerial Sciences, Volume 6, Issue 2.
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