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The Long-Run Return to Investors in Share Issue Privatizations

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  • William L. Megginson
  • Robert C. Nash
  • Jeffry Netter
  • Adam L. Schwartz
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    Abstract

    We examine the long-run returns earned by domestic, international, and US investors who purchase shares at the first open-market price in 158 share issue privatizations (SIPs) from 33 countries during the period 1981-1997. We compute one-, three-, and five-year net returns for domestic, international, and US market indexes, and industry-matched comparison samples. We find statistically significant positive net returns for the 158 unseasoned SIPs for all holding periods and compared with all benchmarks. Our findings contrast with the patterns reported in previous research for equity offerings of private firms in the US and other countries.

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    Bibliographic Info

    Article provided by Financial Management Association in its journal Financial Management.

    Volume (Year): 29 (2000)
    Issue (Month): 1 (Spring)
    Pages:

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    Handle: RePEc:fma:fmanag:megginson00

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    Cited by:
    1. Feng, Fang & Sun, Qian & Tong, Wilson H. S., 2004. "Do government-linked companies underperform?," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2461-2492, October.
    2. McGraw, Patricia A., 2005. "Privatization and the Corporate Cost of Capital in New Zealand: An Application of Fama and French (1999)," Review of Applied Economics, Review of Applied Economics, vol. 1(1).
    3. Wolf, C. & Pollitt, M.G., 2009. "The Welfare Implications of Oil Privatisation: A Cost-Benefit Analysis of Norway’s Statoil," Cambridge Working Papers in Economics 0912, Faculty of Economics, University of Cambridge.
    4. Saffar, Walid, 2014. "The political economy of share issue privatization: International evidence," Journal of Multinational Financial Management, Elsevier, vol. 24(C), pages 1-18.
    5. Yu, Ming-Miin & Fan, Chih-Ku, 2008. "The effects of privatization on return to the dollar: A case study on technical efficiency, and price distortions of Taiwan's intercity bus services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(6), pages 935-950, July.
    6. Bulent Aybar, C., 2002. "The long-term performance of privatization-related ADR issues," Emerging Markets Review, Elsevier, vol. 3(2), pages 135-164, June.
    7. Harper, Joel T., 2002. "The performance of privatized firms in the Czech Republic," Journal of Banking & Finance, Elsevier, vol. 26(4), pages 621-649, April.
    8. Carla Vieira & Ana Paula Serra, 2006. "Abnormal Returns in Privatization Public Offerings: The case of Portuguese firms," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, issue 23, pages 6-34, June.
    9. Haykel Hamdi & Duc Khuong Nguyen & Hassan Obeid, 2014. "The short- and long-term performance of privatization initial public offerings in Europe," Working Papers 2014-241, Department of Research, Ipag Business School.
    10. Chi, Jing & McWha, Matthew & Young, Martin, 2010. "The performance and the survivorship of New Zealand IPOs," International Review of Financial Analysis, Elsevier, vol. 19(3), pages 172-180, June.
    11. Sun, Qian & Tong, Wilson H. S., 2003. "China share issue privatization: the extent of its success," Journal of Financial Economics, Elsevier, vol. 70(2), pages 183-222, November.
    12. Langnan Chen & Steven Li & Yijia Chen, 2005. "Corporate Governance and Corporate Performance: Some Evidence from Newly Listed Firms on Chinese Stock Markets," School of Economics and Finance Discussion Papers and Working Papers Series 204, School of Economics and Finance, Queensland University of Technology.

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