Virgilio Galdo

Streamlining and Privatization Prices in the Telecommunications Industry

This paper fills a void in the issue of determinants of privatization prices by concentrating in one industry across many countries. This has not been done before, as the literature has only focused on (i) many industries in one country, (ii) a single industry in one country, and (iii) many industries in many countries. We complement a recently released database with newly collected data, and we are able to cover 84 telecommunications privatizations, which account for nearly 80 percent of the sector in terms of value. Our findings are consistent with the little existing work on privatization prices, as our best policy prescription is primarily to concentrate on the transparency and cleanliness of the privatization process, as sale methods do matter. We show that government administration of labor downsizing may result in adverse selection, as the best workers are the first to leave when given the opportunity.

Should state-owned firms change CEOs before privatization? Some evidence from the telecommunications industry

Should state-owned enterprises change chief executive officer (CEO) before privatizing? We test competing views on this question by complementing a recently released database with newly collected data. We are able to cover 77 telecommunications privatizations, which account for nearly 80% of the sector in terms of value. We find that CEO replacement will improve performance in the telecommunications industry before privatization as measured by penetration, operating efficiency and profitability. Chief executive officer change before privatization does appear to have real consequences in firm performance before privatization.

Does Privatization Deliver? Access to Telephone Services and Household Income in Poor Rural Areas Using a Quasi-Natural Experiment in Peru

This paper takes advantage of a quasi-natural experiment in Peru by which the privatized telecommunications company was required by government to randomly install and operate public pay phones in small rural towns throughout the national territory. Using a specially designed household survey for a representative sample of rural towns, it is possible to link access to telephone services with household income. It was found that, regardless of the income measurement, most characteristics of public telephone usage are positively linked with income. Remarkably, the benefits occur at both non-farm and farm income levels. Not only do the findings hold when using instrumental variables, but they are also further confirmed when using propensity scores matching methods.

Foreign Participation and Hiring Patterns after Privatization

Critics of globalization claim that foreign ownership of privatized firms is linked to negative post-privatization labor outcomes, such as more firing and less hiring. This paper uses new firm-level data for a cross section of countries to test this idea and provides evidence that foreign purchasers of state-owned enterprises tend to acquire firms that were already better restructured before privatization. Additionally, this paper does not find evidence that foreign participation in privatized firms is linked to negative labor outcomes.