1901
Views
685
Downloads |
State ownership and performance of firm: evidence from India
Ombir Singh* 
Article | Year: 2019 | Pages: 195 - 217 | Volume: 43 | Issue: 2 Received: February 24, 2019 | Accepted: April 29, 2019 | Published online: June 10, 2019
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
Selected
Industry
|
No.
of selected firms
|
Percentage
share in industry’s sales
|
|
Engineering Goods
|
18
|
81.26
|
|
Fertilizers
|
12
|
66.21
|
|
Mining/minerals
|
15
|
88.60
|
|
Refineries
|
10
|
98.91
|
|
Powergeneration & supply
|
17
|
64.85
|
Source: Capitaline database.
|
Industry
|
Percentage share in industry’s sales
|
Percentage share in industry’s total assets
|
Percentage share in industry’s employee cost
|
Herfindahl Index (H)1
|
Concentra-tion Ratio (CR)2
|
|
Public
|
Private
|
Public
|
Private
|
Public
|
Private
|
|
Engineering
|
25.31
|
74.09
|
21.22
|
78.46
|
24.54
|
75.06
|
0.12
|
56.60
|
|
Fertilizers
|
29.76
|
67.73
|
19.16
|
72.73
|
46.58
|
49.98
|
0.10
|
50.62
|
|
Refineries
|
76.57
|
23.42
|
68.33
|
32.04
|
78.25
|
21.74
|
0.19
|
83.09
|
|
Mining/minerals
|
22.10
|
77.89
|
23.68
|
76.31
|
62.73
|
37.26
|
0.45
|
86.99
|
|
Power
|
68.29
|
31.70
|
71.87
|
28.12
|
74.76
|
25.23
|
0.05
|
33.51
|
Note: the figures in the table are the averages of the period from 2011 to 2015. Source: author’s calculation.
|
Industry
|
Year
|
Mean OTE
|
Standard deviation
|
Range
|
|
Public
|
Private
|
Industry
|
Public
|
Private
|
Industry
|
Public
|
Private
|
|
Engineering goods
|
2011
|
0.909
|
0.964
|
0.937
|
0.085
|
0.037
|
0.071
|
0.260
|
0.131
|
|
2015
|
0.913
|
0.973
|
0.943
|
0.094
|
0.035
|
0.077
|
0.304
|
0.108
|
|
2011
|
0.920
|
0.976
|
0.995
|
0.066
|
0.033
|
0.055
|
0.169
|
0.111
|
|
2015
|
0.905
|
0.963
|
0.941
|
0.226
|
0.040
|
0.142
|
0.900
|
0.127
|
|
2011
|
0.759
|
0.739
|
0.749
|
0.296
|
0.177
|
0.241
|
0.839
|
0.437
|
|
2015
|
0.719
|
0.744
|
0.732
|
0.165
|
0.297
|
0.237
|
0.848
|
0.541
|
|
2011
|
0.896
|
0.687
|
0.792
|
0.090
|
0.391
|
0.280
|
0.260
|
0.686
|
|
2015
|
0.888
|
0.828
|
0.858
|
0.092
|
0.214
|
0.166
|
0.247
|
0.619
|
|
2011
|
0.673
|
0.713
|
0.693
|
0.247
|
0.357
|
0.304
|
0.676
|
0.657
|
|
2015
|
0.789
|
0.823
|
0.806
|
0.247
|
0.170
|
0.167
|
0.499
|
0.588
|
|
Industry
|
|
Average Sectoral Technical Efficiency
|
|
OTE
|
PTE
|
SE
|
|
Engineering goods
|
Private sector
|
0.969
|
0.994
|
0.975
|
|
Public sector
|
0.911
|
0.934
|
0.976
|
|
Mean difference
|
0.058**
|
0.06**
|
-0.001
|
|
Fertilizers
|
Private sector
|
0.97
|
0.989
|
0.981
|
|
Public sector
|
0.912
|
0.964
|
0.978
|
|
Mean difference
|
0.057**
|
0.025**
|
0.002
|
|
Mining/ minerals
|
Private sector
|
0.751
|
0.852
|
0.889
|
|
Public sector
|
0.729
|
0.949
|
0.777
|
|
Mean difference
|
0.022
|
-0.098**
|
0.112**
|
|
Refineries
|
Private sector
|
0.758
|
0.956
|
0.799
|
|
Public sector
|
0892
|
0.992
|
0.899
|
|
Mean difference
|
-0.135**
|
-0.036**
|
-0.1**
|
|
Power generation &
supply
|
Private sector
|
0.768
|
0.907
|
0.851
|
|
Public sector
|
0.731
|
0.912
|
0.794
|
|
Mean difference
|
0.037
|
-0.005
|
0.057
|
***, **, and * significant at 1%, 5% and 10% level, respectively. Source: author’s calculation.
|
Explanatory variables
|
Dependent variable
|
|
OTE
|
PTE
|
SE
|
|
Const (α0)
|
1.04993***
|
1.40393***
|
1.06753***
|
|
CL (α1)
|
−1.194e-05***
|
−2.476e-05***
|
3.473e-06
|
|
Size (α2)
|
0.166651**
|
0.634850***
|
−0.117076
|
|
H (α3)
|
−0.419001
|
−1.17132**
|
0.0588547
|
|
Pub (α4)
|
−0.0545116***
|
−0.181944***
|
−0.0290541
|
|
Ind2 (β2)
|
−0.0284189
|
−0.147134**
|
0.0163939
|
|
Ind3 (β3)
|
−0.215366***
|
−0.300554***
|
−0.136254***
|
|
Ind4 (β4)
|
−0.193480***
|
−0.0446409
|
−0.218155***
|
|
Ind5 (β5)
|
−0.0914068**
|
−0.120872
|
−0.0859020*
|
|
Ind1 Pub (γ1)
|
0.0172838
|
−0.073493**
|
0.00322398
|
|
Ind2 Pub (γ2)
|
−0.00686827
|
0.0734939
|
−0.00322398
|
|
Ind3 Pub (γ3)
|
0.0343362
|
0.387319***
|
−0.0870903
|
|
Ind4 Pub (γ4)
|
0.167070***
|
0.159962**
|
0.133120**
|
|
Ind5 Pub (γ5)
|
−0.0611306
|
0.195389**
|
−0.127205**
|
|
T12 (δ12)
|
−0.0318665
|
−0.0345488
|
−0.0138445
|
|
T13 (δ13)
|
0.0149875
|
−0.0358358
|
0.0193831
|
|
T14 (δ14)
|
0.0275370
|
−0.0141005
|
0.0304489
|
|
T15 (δ15)
|
0.00427809
|
−0.0198059
|
0.00490746
|
|
Sigma
|
0.180388***
|
0.184465**
|
0.213104**
|
***, **, and * significant at 1%, 5% and 10% level, respectively. Source: authors’ calculation.
|
Industry
|
Firm
|
Ownership status
|
|
Engineering goods
|
B H E L
|
Public
|
|
BEML Ltd
|
Public
|
|
Bharat Dynamics Ltd
|
Public
|
|
Engineers India Ltd
|
Public
|
|
Hindustan Aeronautics Ltd
|
Public
|
|
Larsen & Toubro Ltd
|
Private
|
|
Siemens Ltd
|
Private
|
|
Tata Projects Ltd
|
Private
|
|
CG Power & Industrial Solution Ltd
|
Private
|
|
Crompton Greaves Ltd
|
Private
|
|
Thermax Ltd
|
Private
|
|
BGR Energy Systems Ltd
|
Private
|
|
Tata Hitachi Construction Machinery Company Pvt Ltd
|
Private
|
|
IL&FS Transportation Networks Ltd
|
Private
|
|
L&T Technology Services Ltd
|
Private
|
|
ISGEC Heavy Engineering Ltd
|
Private
|
|
Sunil Hitech Engineers Ltd
|
Private
|
|
Ashoka Buildcon Ltd
|
Private
|
|
Fertilizers
|
Nation Fertilizers Ltd
|
Public
|
|
Rashtriya Chemicals & Fertilizers Ltd
|
Public
|
|
Madras Fertilizers Ltd
|
Public
|
|
Fertilisers & Chemicals Travancore Ltd.
|
Public
|
|
Coromandel International Ltd
|
Private
|
|
Chambal Fertilizers & Chemical Ltd
|
Private
|
|
Gujarat State Fertilizers & Chemical Ltd
|
Private
|
|
Gujarat Narmada Valley Fertilizers & Chemical
Ltd
|
Private
|
|
Zuari Agro Chemicals Ltd
|
Private
|
|
Nagarjuna Fertilizers & Chemical Ltd
|
Private
|
|
Deepak Fertilizers & Petrochemicals Corp .Ltd
|
Private
|
|
Mangalore Chemicals &Fertilizers Ltd
|
Private
|
|
Mining/minerals
|
Coal India Ltd
|
Public
|
|
Gujarat Mineral Development Corp. Ltd
|
Public
|
|
MOIL Ltd
|
Public
|
|
NMDC Ltd
|
Public
|
|
20 Microns Ltd
|
Private
|
|
Associated Stone Industries Ltd
|
Private
|
|
Facor Alloys Ltd
|
Private
|
|
Ferro Alloys Corporation Ltd
|
Private
|
|
Indian Metals & Ferro Alloys Ltd
|
Private
|
|
Indsil Hydro Power & Manganese Ltd
|
Private
|
|
Maithan Alloys Ltd
|
Private
|
|
Rohit Ferro Tech Ltd
|
Private
|
|
Sandur Manganese & Iron Ores Ltd
|
Private
|
|
Shirpur Gold refinery Ltd
|
Private
|
|
Vedanta Ltd
|
Private
|
|
Refineries
|
Bharat Petroleum Corporation
Ltd
|
Public
|
|
Bharat Oman Refinery Ltd
|
Public
|
|
Chennai Petroleum
Corporation Ltd
|
Public
|
|
Hindustan Petroleum
Corporation Ltd
|
Public
|
|
Indian Oil Corporation Ltd
|
Public
|
|
Mangalore Refinery & Petrochemicals Ltd
|
Public
|
|
Numaligarh Refinery Ltd
|
Public
|
|
Essar Oil Ltd
|
Private
|
|
HPCL-Mittal Energy Ltd
|
Private
|
|
Reliance Industries Ltd
|
Private
|
|
Power generation &
supply
|
NTPC Ltd
|
Public
|
|
Gujarat Industries Power Company Ltd
|
Public
|
|
NHPC Ltd
|
Public
|
|
NLC India Ltd
|
Public
|
|
Power Grid Corp. of India Ltd
|
Public
|
|
SJVN Ltd
|
Public
|
|
Adani Power Ltd
|
Private
|
|
CESC Ltd
|
Private
|
|
Jaiprakash Power Ventures Ltd
|
Private
|
|
JSW Energy Ltd
|
Private
|
|
RattanIndia Power Ltd
|
Private
|
|
Reliance Infrastructure Ltd
|
Private
|
|
Reliance Power Ltd
|
Private
|
|
Schneider Electric Infrastructure Ltd
|
Private
|
|
Suzlon Energy Ltd
|
Private
|
|
Tata Power Company Ltd
|
Private
|
|
Torrent Power Ltd
|
Private
|
Ahluwalia, I. J., 1995. New economic policies, enterprises, and privatization in India. In: R. Cassen and V. Joshi, eds. India: The Future of Economic Reform. Delhi: Oxford University Press.
Ahuja, G. and Majumdar, S. K., 1998. An assessment of the performance of Indian state-owned enterprises. Journal of Productivity Analysis, 9(2), pp. 113-132 [ CrossRef]
Alchian, A. A., 1965. Some economics of property rights. Il politico, pp. 816-829.
Banker, R. D., Charnes, A. and Cooper, W. W., 1984. Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management science, 30(9), pp. 1078-1092 [ CrossRef]
Bartel, A. P. and Harrison, A. E., 2005. Ownership versus environment: Disentangling the sources of public-sector inefficiency. Review of Economics and Statistics, 87(1), pp. 135-147 [ CrossRef]
Bhaya, H., 1990. Management efficiency in the private and public sectors in India. Public enterprise at the crossroads, pp. 228-240 [ CrossRef]
Boardman, A. E. and Vining, A. R., 1989. Ownership and performance in competitive environments: A comparison of the performance of private, mixed, and state-owned enterprises. The Journal of Law and Economics, 32(1), pp. 1-33 [ CrossRef]
Boubakri, N. and Cosset, J. C., 1998. The financial and operating performance of newly privatized firms: Evidence from developing countries. The Journal of Finance, 53(3), pp. 1081-1110 [ CrossRef]
Caves, D. W. and Christensen, L. R., 1980. The relative efficiency of public and private firms in a competitive environment: the case of Canadian railroads. Journal of political Economy, 88(5), pp. 958-976 [ CrossRef]
Chames, A., Cooper, W. W. and Rhodes, E., 1978. Measuring the efficiency of decision making units. European journal of operational research, 2(6), pp. 429-444 [ CrossRef]
De Alessi, L., 1980. The economics of property rights: A review of the evidence.
Dewenter, K. L. and Malatesta, P. H., 2001. State-owned and privately owned firms: An empirical analysis of profitability, leverage, and labor intensity. American Economic Review, 91(1), pp. 320-334 [ CrossRef]
Dholakia, B. H., 1978. Relative performance of public and private manufacturing enterprises in India: total factor productivity approach. Economic and Political Weekly, pp. M4-M11.
Dudu, H. and Kilicaslan, Y., 2009. Concentration, profitability and (in) efficiency in large scale firms. In: Productivity, Efficiency, and Economic Growth in the Asia-Pacific Region, pp. 39-58. Physica-Verlag HD [ CrossRef]
Estrin, S. [et al.], 2009. The effects of privatization and ownership in transition economies. Journal of Economic Literature, 47(3), pp. 699-728 [ CrossRef]
Estrin, S. and Perotin, V., 1991. Does ownership always matter? International Journal of Industrial Organization, 9(1), pp. 55-72 [ CrossRef]
Fama, E. F., 1980. Agency problems and the theory of the firm. Journal of political economy, 88(2), pp. 288-307 [ CrossRef]
Färe, R., Grosskopf, S. and Logan, J., 1985. The relative performance of publicly-owned and privately-owned electric utilities. Journal of Public Economics, 26(1), pp. 89-106 [ CrossRef]
Frydman, R. [et al.], 1999. When does privatization work? The impact of private ownership on corporate performance in the transition economies. The quarterly journal of economics, 114(4), pp. 1153-1191 [ CrossRef]
Galal, A. [et al.], 1994. Welfare consequences of selling public enterprises: An empirical analysis: a summary. The World Bank [ CrossRef]
Goldeng, E., Grünfeld, L. A. and Benito, G. R., 2008. The performance
differential between private and state owned enterprises: The roles of
ownership, management and market structure. Journal
of Management Studies, 45(7), pp. 1244-1273.
Grossman, S. J. and Hart, O. D., 1980. Takeover bids, the free-rider problem, and the theory of the corporation. The Bell Journal of Economics, pp. 42-64 [ CrossRef]
Gupta, M., 1982. Productivity performance of the public and the private sectors in India: A case study of the fertilizer industry. Indian Economic Review, 17(2/4), pp. 165-186.
Gupta, N., 2005. Partial privatization and firm performance. The Journal of Finance, 60(2), pp. 987-1015 [ CrossRef]
Gupta, S., Jain, P. K. and Yadav, S. S., 2011. Impact of MoU on financial performance of public sector enterprises in India. Journal of Advances in Management Research, 8(2), pp. 263-284 [ CrossRef]
Jain, R., 2017. Public sector enterprise disinvestment in India: Efficiency gains in a political context. Journal of Asian Economics, 53, pp. 18-36 [ CrossRef]
Kaur, K. and Kumar, S., 2010. Corporate Ownership and the Technical and Scale Efficiency of Pharmaceutical Firms in India-Empirical Evidence. South East European Journal of Economics and Business, 5(2), pp. 95-106 [ CrossRef]
Kreps, D. M. and Wilson, R., 1982. Reputation and imperfect information. Journal of economic theory, 27(2), pp. 253-279 [ CrossRef]
La Porta, R. and Lopez-de-Silanes, F., 1999. The benefits of privatization: Evidence from Mexico. The Quarterly Journal of Economics, 114(4), pp. 1193-1242 [ CrossRef]
Levy, B., 1987. A theory of public enterprise behavior. Journal of Economic Behavior & Organization, 8(1), pp. 75-96 [ CrossRef]
Majumdar, S. K., 1998. Assessing comparative efficiency of the state-owned mixed and private sectors in Indian industry. Public Choice, 96(1-2), pp. 1-24 [ CrossRef]
Manne, H. G., 1965. Mergers and the market for corporate control. Journal of Political economy, 73(2), pp. 110-120 [ CrossRef]
Martin, S. and Parker, D., 1997. The impact of privatisation. London: Routledge.
Megginson, W. L., 2005. The financial economics of privatization. Oxford: Oxford University Press [ CrossRef]
Megginson, W. L., Nash, R. C. and Van Randenborgh, M., 1994. The financial and operating performance of newly privatized firms: An international empirical analysis. The Journal of Finance, 49(2), pp. 403-452 [ CrossRef]
Mijić, K., Jakšić, D. and Berber, N., 2015. The analysis of productivity and profitability in the CEE region: Focus on the private and public sector. Serbian Journal of Management, 10(2), pp. 215-224 [ CrossRef]
Mohan, T. T. and Ray, S. C., 2003. Technical efficiency in public and private sectors in India: Evidence from the post-reform years.
Niskanen, W. A., 1975. Bureaucrats and politicians. The Journal of Law and Economics, 18(3), pp. 617-643 [ CrossRef]
Pina, V. and Torres, L., 2006. Public-private efficiency in the delivery of services of general economic interest: The case of urban transport. Local government studies, 32(2), pp. 177-198 [ CrossRef]
Qi, D., Wu, W. and Zhang, H., 2000. Shareholding structure and corporate performance of partially privatized firms: Evidence from listed Chinese companies. Pacific-Basin Finance Journal, 8(5), pp. 587-610 [ CrossRef]
Ramaswamy, K., 2001. Organizational ownership, competitive intensity, and firm performance: An empirical study of the Indian manufacturing sector. Strategic Management Journal, 22(10), pp. 989-998 [ CrossRef]
Sarkar, J., Sarkar, S. and Bhaumik, S. K., 1998. Does ownership always matter?-Evidence from the Indian banking industry. Journal of Comparative Economics, 26(2), pp. 262-281 [ CrossRef]
Shavell, S., 1979. Risk sharing and incentives in the principal and agent relationship. Bell Journal of Economics, 10(1), pp. 55-73 [ CrossRef]
Singh, O. and Bansal, S., 2017. An Analysis of Revenue Maximising Efficiency of Public Sector Banks in the Post-Reforms Period. Journal of Central Banking Theory and Practice, 6(1), pp. 111-125 [ CrossRef]
Sufian, F. and Abdul Majid, M. Z., 2008. Bank ownership, characteristics, and performance: A comparative analysis of domestic and foreign Islamic banks in Malaysia. Journal of King Abdulaziz University: Islamic Economics, 21(2) [ CrossRef]
Sufian, F. and Habibullah, M. S., 2009. Do mergers and acquisitions leads to a higher technical and scale efficiency? A counter evidence from Malaysia. African Journal of Business Management, 3(8), pp. 340-349.
Thomsen, S. and Pedersen, T., 1996. Nationality and ownership structures: The 100 largest companies in six European nations. MIR: Management International Review, 36(2), pp. 149-166.
Tichá, M., 2012. State or private ownership? A survey of empirical studies. Review of Economic Perspectives, 12(2), 120-144 [ CrossRef]
Tongzon, J. and Heng, W., 2005. Port privatization, efficiency and competitiveness: Some empirical evidence from container ports (terminals). Transportation Research Part A: Policy and Practice, 39(5), pp. 405-424 [ CrossRef]
Williamson, O. E., 1975. Markets and hierarchies: analysis and antitrust implications: a study in the economics of internal organization. University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.
Yarrow, G. [et al.], 1986. Privatization in theory and practice. Economic policy, 1(2), pp. 323-364 [ CrossRef]
Zhang, Y. F., Parker, D. and Kirkpatrick, C., 2008. Electricity sector reform in developing countries: an econometric assessment of the effects of privatization, competition and regulation. Journal of Regulatory Economics, 33(2), pp. 159-178 [ CrossRef]
|
|
June, 2019
II/2019 |
