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States as LBO Specialists: evidence from Portugal

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  • Alpalhão, Rui
  • Alves, Paulo

Abstract

The paper’s purpose is to quantify the performance of a State in its action as a de facto LBO specialist, taking companies private to restructure them and subsequently reselling them in the share market. A sample comprising all the listed companies nationalized in Portugal in 1975 and 1976 that were subsequently privatised through a relisting by means of a share issue is constructed. The returns earned by the Portuguese Republic are computed, comparing the market values of nationalised companies at the time of their privatization with their theoretical value in a non-nationalization scenario. A negative abnormal return for the Portuguese Republic’s investment in shares is found. This negative return is much worse than the ones computed in similar work for France.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 51433.

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Date of creation: 2013
Date of revision: 2013
Publication status: Published in International Journal of Financial Research 2.4(2013): pp. 68-76
Handle: RePEc:pra:mprapa:51433

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Keywords: nationalizations; privatizations; LBO; wealth transfers;

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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.
  2. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
  3. Villalonga, Belen, 2000. "Privatization and efficiency: differentiating ownership effects from political, organizational, and dynamic effects," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 43-74, May.
  4. Kaplan, Steve & Schoar, Antoinette, 2004. "Private Equity Performance: Returns, Persistence and Capital Flows," Working papers 4446-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
  5. Cao, Jerry & Lerner, Josh, 2009. "The performance of reverse leveraged buyouts," Journal of Financial Economics, Elsevier, vol. 91(2), pages 139-157, February.
  6. Paul H. Malatesta & Kathryn L. DeWenter, 2001. "State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity," American Economic Review, American Economic Association, vol. 91(1), pages 320-334, March.
  7. Harper, Joel T, 2001. "Short-Term Effects of Privatization on Operating Performance in the Czech Republic," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 24(1), pages 119-31, Spring.
  8. Hervé Alexandre & Gérard Charreaux, 2001. "Efficiency of French Privatizations:A Dynamic Vision," Working Papers CREGO 011001, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations, revised Oct 2001.
  9. Wei, Zuobao & Varela, Oscar & Kabir Hassan, M., 2002. "Ownership and performance in Chinese manufacturing industry1," Journal of Multinational Financial Management, Elsevier, vol. 12(1), pages 61-78, February.
  10. Wei, Zuobao & Varela, Oscar, 2003. "State equity ownership and firm market performance: evidence from China's newly privatized firms," Global Finance Journal, Elsevier, vol. 14(1), pages 65-82, May.
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