Saudi Arabian IPOs and privatized firms profitability

Abstract

A sample of 21 privatized and IPO Saudi firms has been examined in this paper. Consistent with the relative literature on privatization and IPOs, we have documented two contrasting outcomes. First, we found that Saudi State Owned Enterprises SOEs and the private joint stock companies are showing a large improvement after-IPO as compared to the pre-IPO financial performance. On the contrary, we found a financial performance deterioration among the family owned businesses or the limited liability type of firms after the IPO compared to the pre-IPO level as measured by the return on assets (ROA) and return on sales (ROS).