Corporatization

AAA

DEFINITION of 'Corporatization'

The act of reorganizing the structure of government owned entity into a legal entity with the corporate structure found in publicly trade companies. These companies tend to have a board of directors (B of D), management and shareholders. However, unlike publicly traded companies, the government is typically the company's only shareholder and that the shares in the company are not traded publicly.

INVESTOPEDIA EXPLAINS 'Corporatization'

The main goal of corporatization is allowing the government to retain ownership of the company but still enable it to run as efficiently as its private counterparts because government departments sometimes are inefficient with the level of bureaucracy involved.

Furthermore, the government may one day feel that the private sector could do a better job of running the company, possibly conducting an offering on the stock market in order to divest it.

RELATED TERMS
  1. Denationalization

    The act of changing a government-run firm into a private-sector ...
  2. Organizational Structure

    Explicit and implicit institutional rules and policies designed ...
  3. Nationalization

    Refers to the process of a government taking control of a company ...
  4. Corporation

    A legal entity that is separate and distinct from its owners. ...
  5. Going Public

    The process of selling shares that were formerly privately held ...
  6. Public Company

    A company that has issued securities through an initial public ...
Related Articles
  1. What's the difference between publicly- ...
    Investing

    What's the difference between publicly- ...

  2. How does privatization affect a company's ...
    Investing

    How does privatization affect a company's ...

  3. IPO Basics Tutorial
    Retirement

    IPO Basics Tutorial

  4. How Education And Training Affect The ...
    Economics

    How Education And Training Affect The ...

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center