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Privatization: public offerings and political objectives

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  • Germa Bel

Abstract

This paper empirically analyses the political and economic objectives underlying privatization on the stock market. Particularly, the factors of SIPs underpricing, are explained, and the study analyses whether the change of political parties in government play a role on the issue. The paper has two main findings. First, larger initial returns occurred in the early stages of privatization. Second, the change of government from left-wing to right-wing did not lead to significantly higher levels of underpricing. The results show that governments are quite pragmatic with respect to underpricing: maximizing proceeds from SIPs shows to be more important than ideological differences between parties in government.

Suggested Citation

  • Germa Bel, 2002. "Privatization: public offerings and political objectives," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1421-1432.
    • Handle: RePEc:taf:applec:v:34:y:2002:i:11:p:1421-1432
    DOI: 10.1080/00036840110100826
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    References listed on IDEAS

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    1. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, December.
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    Cited by:

    1. Bel, Germà & Trillas, Francesc, 2005. "Privatization, corporate control and regulatory reform: the case of Telefonica," Telecommunications Policy, Elsevier, vol. 29(1), pages 25-51, February.
    2. Chin-Tsai Lin & Yi-Hsien Wang, 2007. "The impact of party alternative on the stock market: the case of Japan," Applied Economics, Taylor & Francis Journals, vol. 39(1), pages 79-85.
    3. Chin-Tsai Lin & Yi-Hsien Wang, 2005. "An Analysis of Political Changes on Nikkei 225 Stock Returns and Volatilities," Annals of Economics and Finance, Society for AEF, vol. 6(1), pages 169-183, May.
    4. Cabeza-García, Laura & Gómez-Ansón, Silvia, 2011. "Post-privatisation ownership concentration: Determinants and influence on firm efficiency," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 412-430, September.
    5. Farinos, Jose E. & Garcia, C. Jose & Ibanez, Ana Ma, 2007. "Operating and stock market performance of state-owned enterprise privatizations: The Spanish experience," International Review of Financial Analysis, Elsevier, vol. 16(4), pages 367-389.
    6. Claude Laurin & Anthony E. Boardman & Aidan R. Vining, 2004. "Government Underpricing of Share‐Issue Privatizations," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(3), pages 399-429, September.
    7. Tarcisio da Gra?a, 2012. "Distribution of Underpricing in Privatization Auctions: Evidence from an Event Study," Review of Economics & Finance, Better Advances Press, Canada, vol. 2, pages 1-19, August.

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