This chart comes from the presentations that Professor Bill Megginson of the University of Oklahoma gave in New Zealand this week. Megginson is arguably the leading academic expert in the field.
It shows that annual privatisation revenues have fluctuated but are currently at record levels.
The EU and US debt crises will no doubt give further impetus to privatisation. SOEs have been effectively eliminated in the United Kingdom.
Megginson lists the lessons of privatisation research as follows.
- Sales improve financial and operating performance
– impact on employment less clear-cut
– generally also yields fiscal bonus for government
- But, privatisation does not always ‘work’
– and governments often try to retain real control
- Investors have benefited from privatisation
– both short and long-term returns are positive
- Governments should sell assets as quickly as possible, for cash, to highest bidder
– favour SIPs (Share Issue Privatisations), allow foreign purchases when possible.
Visit www.nzbr.org.nz to view the presentation Professor Megginson gave at a New Zealand Business Roundtable CEO Forum.