Abstract:
Privatization represents a revolution in the role of government in promoting economic growth and
development by allowing private equity owners to
buy stak
e on State Owned Enterprises
.
Privatization has high likelihood of increasing firms’ profitability given that private equity owners
with the stake in the firm will always want the firm run efficiently
. The main aim of the study was
to
examine
the
e
ffect of
firm ownership structure on financial performance of privatized state
corporations in Kenya.
The study
adopted
descriptive
research design
.
The target population of the
study
was
the
11
privatized
listed firms in Nairobi Stock Exchange
. The study
collect
ed
secondary
data from
the 2006
-
201
6
audited accounts reports.
The study use
d
descriptive statistics including
mean and inferential statistics like
Pearson Correlation
and
R
egression
analysis
to establish
the
relationship between
privatization and f
inancial performance
of these firms
.
The analyzed data
was
presented using tables and
charts. The
study established that based on random effect model
statistically chosen for the study,
only government shares trading had significant effect on the
privatize
d firms listed in NSE return on asset indicating that an increase in government shares
result
ed
in
an
increase in return on asset units keeping private shares, The question whether
firm
ownership structure affects return on asset of privatized state corporations in Kenya was answered
by random model regression analysis. The study established
government shares had insignificant
effect on the privatized firms listed in NSE return on in
vestment; whereas private shares had
significant effect on returns on investment, of the privatized state corporations listed in NSE.