Do changes in organizational status affect financial performance?

Abstract

In recent years there has been worldwide interest in ‘privatization’ and transferring government department functions to quasi-autonomous agencies. This paper presents the results of a study of 10 organizations in the U.K. which underwent changes in their organizational status within government or which crossed the public-private boundary. The focus of the study is the impact of these organizational status changes on financial performance measured using a set of standard financial ratios. These ratios did not provide a consistent set of statistically significant results. Organizational status changes in the direction of privatization do not appear to guarantee improved performance.