PRIVATE AND STATE-OWNED ENTERPRISES’ PERFORMANCE; AN EMPIRICAL STUDY OF THE OIL & GAS AND CONSUMER GOODS COMPANIES IN INDONESIA

Abstract

The purpose of this study is to compare the performances of private and state-owned companies listed for oil and gas, and consumer goods, in Indonesia. The study employs a comparative analysis based on 108 state-owned company-years and 116 privately-owned company-years observed between 2011 and 2014. Profitability testing is used to measure the difference on earnings ratio between state-owned and privately-owned companies; leverage testing was also employed to analyse the debt ratio of state-owned and privately-owned companies. Using corporate data from 224 annual financial reports from the Indonesian stock exchange, the study calculated profitability analysis using the t-test. The study found that the private companies performed better than the state-owned samples. In conclusion, even though insignificant, is was found that private ownership leads to lower levels of leverage and higher profitability and efficiency, when comparing the two industries. A further recommendation is that it would be robust to gather more industry types.