Privatization is the conversion of a government-run enterprise to one that is privately owned and operated. The conversion is made by selling shares to individual or institutional investors.
The theory behind privatization is that privately run enterprises, such as utility companies, airlines, and telecommunications systems, are more efficient and provide better service than government-run companies.
But in many cases, privatization is a way for the government to raise cash and to reduce its role as service provider.
- Browse Related Terms: 10-k, 8-k, Acquisition, Audit committee, Closely held, Conglomerate, Depositary bank, Diluted earnings per share, Insider trading, Merger, Privatization, Retained earnings, Reverse stock split, Sarbanes-Oxley Act of 2002, Spin-off, Stock split