The effects of changes in corporate governance and restructurings on operating performance: Evidence from privatizations

Using a sample of 161 firms (privatized from 1961 to 1999), our study offers evidence of how restructurings and corporate governance changes affect the firm's post-privatization performance. Prior to privatization, governments may choose to restructure firms through governance changes (i.e., establish relation with strategic foreign investors, implement employee share ownership plans) and/or restructurings (i.e., acquisitions, divestitures, re-capitalizations). We first extend existing privatization research by documenting and describing these restructurings. We then conduct preliminary tests to examine whether such restructurings/governance changes have affected post-privatization operating performance. Our results suggest that both restructuring and changes in corporate governance are important determinants of post-privatization performance.