The Impact of Corporate Governance, Ownership Structure, and Economic and Financial Liberalization on the Financial and Operating Performance of Newly Privatized Firms in Selected MENA Countries

Privatization of state-owned enterprises (SOEs) is considered the main vehicle for reinforcement and improvement in private sector performance. In fact, during the past two decades, privatization has become one of the most important economic phenomena in the world. Since the Thatcher government in Great Britain first launched large-scale privatizations, approximately $ 1.25 trillion has been raised through privatization. Moreover, share issue privatizations (SIPs) accounted for $ 750 billion between 1980 and 2000 (D’Souza, Megginson, and Nash 2001). This phenomenon is well documented for several developed and developing countries around the world. In this paper we are concentrating on developing countries, principally selected Middle East and North Africa (MENA) countries, which have decided to embrace a market-oriented economic system. These countries have adopted, within a package of fundamental policies, several privatization programs to improve the performance of their SOEs. The commitment to these policies was usually prescribed by the international donor agencies, such as the World Bank and/or the International Monetary Fund, as a prerequisite for development and structural adjustment loans. While privatization refers to the transfer of ownership from the government to the private sector, structural adjustment programs involve different forms of liberalization measures, such as reduced controls and the removal of all anti-competitive barriers, which change the market dynamics.