nep-cfn New Economics Papers
on Corporate Finance
Issue of 2008‒09‒05
three papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Does Ownership Matter? The Performance and Efficiency of State Oil vs. Private Oil (1987-2006) By Wolf, C
  2. Real and Financial Industry Booms and Busts By Gerard Hoberg; Gordon M. Phillips
  3. Post-Merger Restructuring and the Boundaries of the Firm By Vojislav Maksimovic; Gordon Phillips; N. R. Prabhala

  1. By: Wolf, C
    Abstract: This paper investigates whether there are systematic performance and efficiency differentials between National Oil Companies (NOCs) and privately-owned oil companies. The dataset is based on a survey published by Energy Intelligence and covers 1,001 firm observation years in the period 1987 to 2006. After summarising the main trends emerging from the data and discussing some key issues of comparing ‘State Oil’ and ‘Private Oil’, I find that non-OPEC NOCs underperform their private sector counterparts in terms of labour and capital efficiency, revenue generation and profitability. I also find that much of these differences could be bridged through a change in ownership. OPEC producers show higher efficiency metrics than the private sector, which might be related to exogenous asset quality. All NOCs produce a significantly lower annual percentage of their upstream reserves. This paper complements the time-series analysis of oil privatisations in Wolf and Pollitt (2008) and suggests that a political preference for State Oil usually comes at an economic cost.
    Keywords: Ownership, performance, efficiency, NOC, IOC, OPEC
    JEL: C21 G32 L20 L71 M21 Q40
    Date: 2008–06
  2. By: Gerard Hoberg; Gordon M. Phillips
    Abstract: We examine how product market competition affects firm cash flows and stock returns in industry booms and busts. In competitive industries, we find that high industry-level stock-market valuation, investment and new financing are followed by sharply lower operating cash flows and abnormal stock returns. We also find that analyst estimates are positively biased and returns comove more when industry valuations are high in competitive industries. In concentrated industries these relations are weak and generally insignificant. Our results suggest that when industry stock-market valuations are high, firms and investors in competitive industries do not fully internalize the negative externality of industry competition on cash flows and stock returns.
    JEL: G10 G14 G31
    Date: 2008–08
  3. By: Vojislav Maksimovic; Gordon Phillips; N. R. Prabhala
    Abstract: Mergers and acquisitions are a fast way for a firm to grow. Using plant-level data, we examine how firms redraw their boundaries after acquisitions. We find that there is a large amount of restructuring in a short period following mergers. Acquirers sell 27% and close 19% of acquired plants within three years of the acquisition. Plants in the target's peripheral divisions, especially in industries in which asset values are increasing, and in industries in which the acquirer does not have a comparative advantage, are more likely to be sold by the acquirer. Acquirers with skill in running their peripheral divisions tend to retain more acquired plants. Plants retained by acquirers increase in productivity whereas sold plants do not. The extent of post-merger restructuring activities and their cross-sectional variation do not support an empire building explanation for mergers. Acquirers readjust their firm boundaries in ways that are consistent with the exploitation of their comparative advantage across industries.
    JEL: G3 G34
    Date: 2008–08

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