American Journal of Applied Sciences

Determination and Evaluation of Privatization Effects on Financial Performance of Firms in Tehran Stock Exchange (TSE)

Hossein Panahian and Hamid Akbarzadeh

DOI : 10.3844/ajassp.2010.597.602

American Journal of Applied Sciences

Volume 7, Issue 4

Pages 597-602

Abstract

Problem statement: Does privatization process, as form of transferring the control of public (state-owned) companies via Tehran Stock Exchange, effect positively on their financial performance? In this study privatized and public firms were compared during 3 years before and after privatization process from 1994 -2007. Approach: To achieve the purpose of the study, the pre-test and post-test design was used. It included two experimental groups and one control group. Results: The results of comparing performance before and after privatization in these firms indicated significant relationship between privatization process and financial performance indices debt-asset ratio, return on total asset, return on equity, return on sale, operating income-sale ratio, gross profit margin, earning per share. Besides, comparing the performance of privatized and public companies showed a significant difference only in EPS (p = 0.026), while there is no significant relationship between privatization and other variables. Conclusion: These results indicated that by passing the transformation stage in the type of ownership in companies, privatized companies have more significance increase in the index EPS in comparison with government companies.

Copyright

© 2010 Hossein Panahian and Hamid Akbarzadeh. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.