Technical (managerial), scale and allocative efficiency differences between private and state owned firms in the international petroleum industry are estimated. The estimation of Aigner-Chu deterministic frontiers, maximum likelihood stochastic frontiers, and maximum likelihood Gamma frontiers make this analysis the most complete and sophisticated testing of property rights theory available. The empirical findings suggest ceteris paribus, that state firms could satisfy the demand for their output with something less than half of their current resource inputs simply by being converted to private, for profit enterprises.

This study compares the pre- and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990. Our results document strong performance improvements, achieved surprisingly without sacrificing employment security. Specifically, after being privatized, firms increase real sales, become more profitable, increase their capital investment spending, improve their operating efficiency, and increase their work forces. Furthermore, these companies significantly lower their debt levels and increase dividend payout. Finally, we document significant changes in the size and composition of corporate boards of directors after privatization.

The coefficients for MEs [Mixed Ownership Enterprises] and SOEs [State Owned Enterprises] are negative and statistically significant at the .05 level for a one-sided alternative in all equations, which indicate that, on average, MEs and SOEs are significantly less profitable and less efficient than PCs [Private Corporations] after controlling for the factors described above. On average, SOEs have a return on equity of almost 12 percent less than PCs ; they have a return on assets and a return on sales that are about 2 percent less than PCs, and their net incomes are \$66 million less than PCs. MEs perform worse: their return on equity is more than 12 percent less than PCs, their return on assets and return on sales are about 3.5 percent less than PCs, and their net income is \$165 million less than that of PCs. In terms of sales per asset, both SOEs and MEs fare equally poorly relative to PCs; but in terms of sales per employee, SOEs are less efficient than MEs.

The results of the comparison strongly support the proposition that government firms display inferior profitability. ... We test an implication of the Boycko et al. (1996) model that government firms will tend to use more labor than their private counterparts. Cross-sectional comparisons support the model

Technical (managerial), scale and allocative efficiency differences between private and state owned firms in the international petroleum industry are estimated. The estimation of Aigner-Chu deterministic frontiers, maximum likelihood stochastic frontiers, and maximum likelihood Gamma frontiers make this analysis the most complete and sophisticated testing of property rights theory available. The empirical findings suggest ceteris paribus, that state firms could satisfy the demand for their output with something less than half of their current resource inputs simply by being converted to private, for profit enterprises.

This study compares the pre- and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990. Our results document strong performance improvements, achieved surprisingly without sacrificing employment security. Specifically, after being privatized, firms increase real sales, become more profitable, increase their capital investment spending, improve their operating efficiency, and increase their work forces. Furthermore, these companies significantly lower their debt levels and increase dividend payout. Finally, we document significant changes in the size and composition of corporate boards of directors after privatization.

The coefficients for MEs [Mixed Ownership Enterprises] and SOEs [State Owned Enterprises] are negative and statistically significant at the .05 level for a one-sided alternative in all equations, which indicate that, on average, MEs and SOEs are significantly less profitable and less efficient than PCs [Private Corporations] after controlling for the factors described above. On average, SOEs have a return on equity of almost 12 percent less than PCs ; they have a return on assets and a return on sales that are about 2 percent less than PCs, and their net incomes are \$66 million less than PCs. MEs perform worse: their return on equity is more than 12 percent less than PCs, their return on assets and return on sales are about 3.5 percent less than PCs, and their net income is \$165 million less than that of PCs. In terms of sales per asset, both SOEs and MEs fare equally poorly relative to PCs; but in terms of sales per employee, SOEs are less efficient than MEs.

The results of the comparison strongly support the proposition that government firms display inferior profitability. ... We test an implication of the Boycko et al. (1996) model that government firms will tend to use more labor than their private counterparts. Cross-sectional comparisons support the model