ANALYSIS OF THE IMPACTS OF PRIVATIZATION ON THE DISTRIBUTION OF WEALTH BEGINNING WITH A DEMONSTRATION OF ADDED VALUE

Abstract

The objective of this study was to identify the possible impacts of privatization on the form of distribution of wealth in companies, in light of the Statement of Value Added (DVA). To do so, by means of the data base located at the Foundation Institute for Financial, Actuarial and Accounting Research (FIPECAFI), that used by the Biggest and Best Issue of the Magazine Exame, all the companies that were privatized from 1995 to 2005 were selected, aided by National Program for Privatization (i.e. PND – the Programa Nacional de Desestatização) which makes the DVA available, all in all making for a total of 16 companies. Analysis consists of a comparison of the total added value generated by each company and analysis of its structure for distribution of its income, both ‘before’ and ‘after’ transfer of ownership. For the purpose of isolating the effect of privatization, a further comparison was made of the performance, in the same period, of a control group made up of companies that remained under state control until 2005. In relation to generation of wealth, the results obtained point to significant improvement in the performance of the companies analyzed, when compared to the period before the event. Another important finding was the notable reduction in expenses in regard to personnel in the privatized companies when compared to personnel expenses in state-run companies. Keywords: DVA. Privatization. Taxes burden. Generation and distribution of value added.