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CERTIFIED MANAGEMENT ACCOUNTANT 39

WHY

PUBLIC COMPANIES

GO PRIVATE

Indrajith Karunarathna – MBA (Sri J’), BSc. Business Administration (Special)
Hons. FCA, FCMA, FMAAT, MCPM, ACIM (UK), ADCN
Accountant-CEB

Introduction

The role of the government has been their economies, such as Singapore, out these economic activities and utilize
an area that was up for debate; there there are many other places where the these assets to a higher level. It is often
are many different philosophies that market forces have provided a more the case that the government sector is
explain as to what are the key activities effective outcome when compared with not profit-oriented. When government
that the government will need to the government activities. entities are being managed, the lack
undertake in order to benefit the people of profit focus and target-driven
of the country. The primary target of the The private sector would look into the environment would eventually lead
government is to improve the quality of market forces and allocate sufficient to inefficiencies in the operations and
life of the people. The government also resources accordingly. Thus, the market deterioration of the productivity of the
has to consider the economy and make mechanisms associated with these organization. Whilst maximizing the
sure that the economic development activities are likely to be beneficial and benefits to the people remain a key area
takes place so that the lives of the the parties will be able to achieve the of importance, the government sector
people are enriched. right outcomes in terms of managing related inefficiencies would eventually
these challenges. lead to wastage of many resources,
After the World War II, governments resulting in the inability to meet the
have heavily intervened in the economic intended results. While many countries
activities of their respective countries. Privatization of still maintain very large state-owned
This could have been due to the state enterprises enterprises, there are many examples of
expectations the public had from their effective privatization and how this has
governments to drive the direction of The privatization of the public impacted different sectors in a positive
the economy. While some of the nations companies is justified by the fact that manner. Thus, the outcomes have been
have been able to successfully develop the private sector will be able to carry successful in many different areas and

www.cma-srilanka.org | Volume 06 -No. 2 - September 2021