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Can Restructuring Gains Be Sustained Without Ownership Changes? Evidence from Withdrawn Privatizations

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  • Lattanzio, Gabriele
  • Megginson, William L.

Abstract

By employing a novel, hand-collected sample of withdrawn and completed share issue privatizations, we show that both groups undergo comparable restructuring processes over the 3 years preceding the event. We employ matching procedures to explicitly control for the restructuring effect, isolating the effect of the ownership transfer from state to private investors on corporate policies and performance. We document that, absent the ownership transfer, most of the gains realized during the restructuring process are reabsorbed over the posttreatment period. The transition from state to private ownership thus represents a necessary condition for the long-term success of privatization programs.

Suggested Citation

  • Lattanzio, Gabriele & Megginson, William L., 2021. "Can Restructuring Gains Be Sustained Without Ownership Changes? Evidence from Withdrawn Privatizations," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(4), pages 1476-1504, June.
    • Handle: RePEc:cup:jfinqa:v:56:y:2021:i:4:p:1476-1504_12
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