State ownership and performance of firm: evidence from India

Abstract

In this paper, an analysis of the performance of public and private sector firms operating in five different industries over the period 2011 to 2015 has been made. Using data envelopment analysis (DEA), the performance has been measured in respect of technical efficiency. To compare the performance of public and private sector firms, two distinct methodologies have been used: independent samples t-test and the Tobit regression model. The results of t-test indicate that the private sector has significantly higher technical efficiency in two industries but in one industry is outperformed by the public sector. In the remaining two industries, both sectors are equally efficient or inefficient. While the results of the Tobit model show that even after controlling for the firm- and industry-specific characteristics as well as the scale effect, in three industries the public sector has a managerial efficiency significantly higher than the private sector, which is found to be more efficient only in one industry.