Distribution of Underpricing in Privatization Auctions: Evidence from an Event Study
Winners of the Brazilian privatization auctions (BPAs) earned, on average, a 0.7 percent abnormal return on the days of the auctions. This translates into 13 percent underpricing. In contrast, using results from the literature as a reference, seasoned share issue privatizations register less underpricing and less excess underpricing. This raises doubts about the prevailing wisdom that auctions are the best method for governments seeking to maximize privatization revenues. Brazilian buyers did not profit. Underpricing for foreign buyers averaged 21 percent. Foreign participation may have been insufficient to extract full surplus. In cross-section, controlling for relative size, buyers¡¯ size does not explain gains among foreigners but mildly explains gains among nationals.
Volume (Year): 2 (2012)
Issue (Month): (August)
|Contact details of provider:|| Postal: 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada|
Web page: http://www.bapress.ca
|Order Information:|| Postal: 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada|
When requesting a correction, please mention this item's handle: RePEc:bap:journl:120301. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlson)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.