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Privatization and Governance Regulation in Frontier Emerging Markets: The Case of Romania

Author

Listed:
  • Gilles Chemla

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Adrian Pop

    (Nantes Univ - IAE Nantes - Nantes Université - Institut d'Administration des Entreprises - Nantes - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université)

  • Diana Pop

    (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage)

Abstract

This chapter investigates the link between the regulation of control transactions and the institutional and corporate features of public companies, by analyzing the massive delisting activity in the Romanian capital market. The peculiar ownership reforms involving a large number of listed companies offer a unique opportunity to verify Bebchuk and Roe's (1999) theory of path dependence. Over time, the Romanian authorities have undertaken wide-ranging institutional reforms, most of which favor blockholders over small and dispersed shareholders. Our empirical approach, based on logit and duration models, allows us to analyze the evolution of public companies over this period and sheds light on the likely events causing frontier emerging markets' eclipse. Our main findings reveal that delisting is more likely to occur when (i) the shareholdings acquired from the privatization authority by circumventing the capital market are high; (ii) the company experiences frequent takeover bids; and (iii) the stock liquidity is low.

Suggested Citation

  • Gilles Chemla & Adrian Pop & Diana Pop, 2010. "Privatization and Governance Regulation in Frontier Emerging Markets: The Case of Romania," Post-Print hal-04212909, HAL.
    • Handle: RePEc:hal:journl:hal-04212909
    DOI: 10.1057/9780230117365_9
    as

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