Effects Of Privatization On Performance Of Privatized Public Enterprises Listed In The Nairobi Security Exchange In Kenya: A Survey Of Privatized Firms In The Nairobi Security Exchange

Public corporations have been criticized for inefficiency and mismanagement.  They are said to contribute to many of the problems that hinder economic growth, such as public sector deficits, domestic and foreign borrowing and misallocation of resources.  They are characterized by widespread misuse of funds due to lack of proper internal management and government interferences.  Due to this, some of the public corporations have either been privatized or commercialized. There is therefore need to assess privatization strategy and relate it to the overall performance of the institutions privatized which are listed on the Nairobi Security Exchange. Therefore, project researched on the relationship of privatization and performance of firms listed on the Nairobi Security Exchange.  The target population was public corporations that are privatized and listed in the Nairobi Security Exchange (NSC).  Secondary data and questionnaire for different variables was used in this study.  Descriptive statistics such as percentages, frequency tables, graphs and regression analysis was used to analyse the data. The conclusion was that  the board of directors was best placed in managing the firm. The privatized company’s profits have been aided by corporate governance which was key to performance in privatized firms. Privatized companies in the Nairobi Security exchange have been aided by corporate governance, and management performs better after privatization. The study found that privatization has a significant influence on the performance of firms listed on the Nairobi Security exchange. The coefficient of determination R² showed that 64.4% of the variations in the financial performance was explained by the independent variables.

The study concludes that management can perform better after privatization; the privatized companies can perform differently and avoid borrowing funds not unless in financial crisis since there is a relationship between debt ratio and the performance. The absence of conflict between managers and stakeholders was an important determinant of performance for privatized firms. The study concludes that culture of an organization helps the privatized firms and companies benefit from an organization culture existing after privatization, it is key to performance and is a good opportunity for future growth that privatized companies maintain the culture.