The analysis employs data on federal government-owned public enterprises (PSEs) since 1980s that encompasses the partial privatization programme to examine the likelihood of privatization. The results indicate that employment-intensive, high-paying but less profitable firms are more likely to be privatized. In terms of lending relationships, the analysis indicates that private banks are the main bank for small firms, and foreign banks are the main bank for large, established firms. State-owned banks are more likely to be associated with leveraged PSEs as compared to other bank groups. In terms of compensation policies in PSEs, the evidence testifies that bigger, established and leveraged PSE firms pay higher salaries.
Ahluwalia, M.S.2002 . Privatization: From policy formulation to implementation—the view from the inside.Fifth Annual Fellow Lecture, Center for Advanced Study of India, University of Pennsylvania, USA.
2.
Angbazo, L., & Narayanan, R.1997). Top management compensation and the structure of the board of directors in commercial banks. European Finance Review, 1(3), 237–257.
3.
Berger, A., Klapper, L., Peria, M.S. Martinez, & Zaidi, R.2008). Bank ownership type and banking relationships. Journal of Financial Intermediation, 17(1), 37–62.
4.
Bhagat, S., & Black, B.2001). The non-correlation between board independence and long-term firm performance. Journal of Corporation Law, 27(2), 231–274.
5.
Bishop, M.R., & Kay, J.A.1989). Privatization in the United Kingdom: Lessons from experience. World Development, 17(6), 643–657.
6.
Boardman, A., & Vining, A.1989). Ownership and performance in competitive environments: A comparison of the performance of private mixed and state-owned enterprises. Journal of Law and Economics, 32(1), 1–33.
7.
Boot, A.W.A.2000 . Relationship banking: What do we know?Journal of Financial Intermediation, 9(1), 7–25.
8.
Caves, D., & Christensen, L.1980). The relative efficiency of public and private firms in a competitive environment: The case of Canadian railroads. Journal of Political Economy, 8(4), 958–976.
9.
Davis, J., Ossowski, R., Richardson, T., & Barnett, S.2000 . Fiscal and macroeconomic impact of privatization. IMF Occasional Paper 194, Washington DC, USA.
10.
Dewenter, K.L., & Malatesta, P.H.2001). State-owned and privately-owned firms: An empirical analysis of profitability, leverage and labor intensity. American Economic Review, 91(1), 320–334.
11.
Frydman R., Gray, C., Hesse, M., & Rapaczynski, A.1999). When does privatization work? The impact of private ownership on corporate performance in the transition economies. Quarterly Journal of Economics, 114(5), 1153–1191.
12.
Galal, A., Jones, L., Tandon, P., & Vogelsang, I.1994 . Welfare consequences of selling public enterprises. New York: Oxford University Press.
13.
Ghosh, S.2009). Productivity and financial structure: Evidence from Indian high-tech firms. Global Business Review, 10(2), 261–278.
14.
Gopalan, R., Nanda, V., & Seru, A.2007). Affiliated firms and financial support: Evidence form Indian business groups. Journal of Financial Economics, 86(3), 759–795.
15.
Government of India 1998 . Public enterprise survey (Vol. 1). New Delhi: Government of India.
16.
Government of India 2002 . Public enterprise survey (Vol.1). New Delhi: Government of India.
17.
Government of India 2004 . Public enterprise survey (Vol.1). New Delhi: Government of India.
18.
Government of India (various years). Public Enterprise Survey. New Delhi: Government of India.
19.
Goyal, S.K., 1998 . Privatization in India. In Privatization in South Asia: Minimizing the negative social effects through restructuring. Report on the sub-regional meeting on privatization in South Asia, Chapter 3. Bangkok: ILO.
20.
Guiso, L., & Minetti, R.2004 . Multiple creditors and information rights: Theory and evidence for US firms. CEPR Discussion Paper 4278.
21.
Gupta, N.2005). Partial privatization and firm performance. Journal of Finance, 60(2), 987–1015.
22.
Kapur, D., & Ramamurti, R.2002 . Privatization in India: The imperatives and consequences of gradualism. CREDPR Working Paper 142, Stanford University, USA.
23.
Kay, J., & Thompson, D.1986). Privatization: A policy in search of a rationale. Economic Journal, 96(1), 18–32.
24.
Makhija, A.K.2006 . Privatisation in India. Economic and Political Weekly (H T Parekh Finance Forum) 41(20), 1947–1951.
25.
Megginson, W.L.2005 . The economics of bank privatization. Journal of Banking and Finance, 29(8–9), 1931–1980.
26.
Megginson, W.L., Nash, R., & Van Randenborgh, M.1994). The financial and operating performance of newly privatized firms: An international empirical analysis. Journal of Finance, 49(1), 403–452.
27.
Naib, S.2004 . Divestment in India: Policies, procedures and practices. New Delhi: SAGE.
28.
Ongena, S., & Smith, D.2000). What determines the number of bank relationships? Cross-country evidence. Journal of Financial Intermediation, 9(1), 26–56.
29.
Rajan, R.G.1992). Insiders and outsiders: The choice between informed and arms-length debt. Journal of Finance, 47(2), 1367–1400.
Reddy, Y.V.1992 . Public enterprise reform and privatization. New Delhi: Himalaya Publishing House.
32.
Rodrik, D.2005 . Why we learn nothing from regressing economic growth on policies. Retrieved from http://ksghome.harvard.edu (accessed on 30 March 2010)
33.
Sarma, E.A.S.2004 . Disinvestment: What FMs have said since 1991?Economic and Political Weekly, 34(22), May, 239–243.
34.
Sharpe, S.A.1990). Asymmetric information, bank lending and implicit contracts: A stylized model of customer relationships. Journal of Finance, 45(1), 1069–1087.
35.
Thakor, A.1996). Capital requirements, monetary policy and aggregate bank lending: Theory and empirical evidence. Journal of Finance, 51(1), 279–324.
36.
Yermack, D.1996). A higher market valuation of companies with a small board of directors. Journal of Financial Economics, 39(1), 185–211.
37.
Yunker, J.A.1975). Economic performance of public and private enterprise: The case of U.S. electric utilities. Journal of Economics and Business, 28(1), 60–67.
