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Credible privatization and market sentiment: Evidence from emerging bond markets

Author

Listed:
  • Narjess Boubakri

    ([1] HEC Montreal, Quebec, Canada[2] American University of Sharjah, United Arab Emirates)

  • Jean-Claude Cosset

    (HEC Montreal, Quebec, Canada)

  • Houcem Smaoui

    (King Fahd University of Petroleum and Minerals, Saudi Arabia)

Abstract

This paper investigates the link between privatization and emerging market sovereign bond spreads. We conjecture that the way privatization is implemented may help to build a favorable market sentiment by gradually building investor confidence, which should then lead to a lower required compensation for policy risk. Controlling for other determinants of sovereign bond spreads, we find that privatization proceeds do not affect spreads, while privatization progress and share issues reduce spreads. Journal of International Business Studies (2009) 40, 840–858. doi:10.1057/jibs.2008.100

Suggested Citation

  • Narjess Boubakri & Jean-Claude Cosset & Houcem Smaoui, 2009. "Credible privatization and market sentiment: Evidence from emerging bond markets," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(5), pages 840-858, June.
    • Handle: RePEc:pal:jintbs:v:40:y:2009:i:5:p:840-858
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    Cited by:

    1. Cosset, Jean-Claude & Somé, Hyacinthe Y. & Valéry, Pascale, 2016. "Credible reforms and stock return volatility: Evidence from privatization," Journal of Banking & Finance, Elsevier, vol. 72(C), pages 99-120.
    2. Narjess Boubakri & Jean-Claude Cosset & Houcem Smaoui, 2011. "Political Institutions and Sovereign Credit Spreads," Working Papers 647, Economic Research Forum, revised 12 Jan 2011.
    3. Jeanneret, Alexandre, 2018. "Sovereign credit spreads under good/bad governance," Journal of Banking & Finance, Elsevier, vol. 93(C), pages 230-246.

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