Privatization Method and Firm Performance: A Study of Indonesia’s State-owned Enterprises

The government's policy of carrying out the privatization toward SOEs is still being pro and contra. Various Privatization methods offer it’s weaknesses and strengths. There are different opinions on the best method for SOE privatization in Indonesia.This study aimed to examine the differences of company's performance before and after privatization. This study also examined the differences of performance before and after privatization on specific sub-samples of the data which is based on privatization method. The population is all companies which execute the privatization method. Secondary data were used namely financial statement which was taken from the Indonesia Stock Exchange, and company's website. Data were analyzed using normality test data. In additional, the paired t-test by using normal distributed data assumption was used to test the hypothesis. The results showed that Direct method privatization positive and significant changes in measuring Total Asset Turnover. Performance conducted Privatization through the capital markets showed different results. Test on the capital market method of data showed similar result with test on the entire data (without separating the privatization method used) that occur significant performance degradation, especially in measuring Total Asset Turnover, Debt Ratio, and Return On Equity. Conducted Management / Employee Buy Out (MBO) privatization implied significant reduction in measuring Debt Ratio and Return on Equity Performance