This study compares the pre and post privatization financial and operating performance of 45 state owned enterprises(SOEs) in Korea that experience full or partial privatization through share sales and/or asset sales during the period 1998 to 2002 following Korean IMF fnancial crisis. We calculate the mean and median of each variable for each firm over the pre and post privatization windows(pre privatization: years -3 to -1 and post privatization: years +1 to +3) by using Wilcoxon Rank Sum Test. For all firms, the year of privatization(year 0) includes both the public and private ownership phases of the enterprise. We therefore exclude 0 from our mean and median calculations.Our results show performance improvements after being privatized. Privatized firms increase profitability, increase operating efficiency, improve output and increase dividend payout. Furthermore these companies lower their debt levels. We find no significant evidence that employment levels fall after privatization. Instead, we document a decrease in average employment, while the Wilcoxon test is not significant at conventional level.Our study allows us to precisely show the causes of these performance improvements after privatization.we show by using multi-regression these improvements are significantly caused by the changes in chief executives, the selection of professional chief executives, SOEs share sales, authority empowerment to low level (in the sector of human resources, financing and strategy), improvements of employee compensation policy and the more using of financial indicators for strategic target which provide incentives for the firms' workers to be more productive, efficient and profitable.Let me present and discuss our empirical results concerning the section below we study.A. Profitability ChangesState owned enterprises(SOEs) are often unprofitable, at least in part because they are often charged with objectives such as maximizing employment and developing inefficient regions. However Privatization is designed to substitute the objectives of profit maximization and exposure to the benefits and penalties of capital market monitoring is expected to focus employees on the task of raising revenues and lowering costs. We measure profitability using three ratios: return on sales(ROS), return on assets(ROA), return on equity(ROE). Only ROE is increased significantly after privatization. This Wilcoxon test is significant at the 1 percent level. The increase of ROE is significantly caused by the change of CEO and improvements of financial indicators for strategic target at the 5 percent level.B. Efficiency ChangeBy throwing an SOE into market competition, government clearly hope that these firms will employ heir human, financial, and technological resources more efficiently. We use both sales per employee(SALEFF) and net income per employee(NIEFF) as the efficiency measure. SALEFF shows significant mean increases following privatization for the sample at the 5 percent level. According to the multi regression, the increase of SALEFF is significantly effected by the more using of financial indicators for strategic target and authority empowerment to low level in the sector of human resources, financing and strategy at the 5 percent level.C. Changes in OutputGovernment hope and expect that real sales(SAL) will increase after privatization. Wilcoxon test shows that real sales increase after privatization, and the change is significant at the one percent level.SAL is significantly caused by the selection of professional chief executives and the improvements of employee compensation policy according to the regression at the five percent level.D. Employment ChangeThe great fear of all governments contemplating privatization programs, of course, is that efficiency and profitability will be achieved only at the cost of large-scale job losses. In other words, governmentsexpect the declines in employment levels following privatization. We examine this by computing average employment levels(EMPL) for the three year periods -3 to-1 and +1 to +3, and seeing if employment falls after privatization. In the results, we find that employment actually decreases by an average, while the Wilcoxon test is not significant at the conventional level.E. Changes in LeverageWhile most governments do not place great priority on improving the financial soundness of the privatized firms, most do expect leverage ratios to drop after privatization. SOEs traditionally have extremely high debt levels, at least in part because they cannot sell equity to private investors, and thus the only forms of equity available to the firm are capital injections from the government and retained earnings.We rely primarily on a total leverage measure, total debt to total assets(LEV), although we also compute a long term debt to equity(LEV2) measure. As predicted, we find a significant decline inleverage for LEV at the 1 percent level. LEV is significantly caused by the share sales of SOEs and the authority empowerment to low levels in the sector of human resources, financing and strategy at the five percent level.F. Changes in Dividend PayoutsAs a final test, we examine whether dividend payouts, measured as total dividend payments divided by net income(PAYOUT) and dividends divided by sales(DIVSAL) increase following privatization. The mean PAYOUT of our sample firms is significantly increased at the one percent level. Clearly becoming a private company implies an increase in cash dividend payments. Similarly this PAYOUT is significantly effected by SOEs share sales and authority empowerment to low levels in the sector of human resources, financing and strategyat the 5 percent and 1 percent level respectively.