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The political economy of residual state ownership in privatized firms: Evidence from emerging markets

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  • Boubakri, Narjess
  • Cosset, Jean-Claude
  • Guedhami, Omrane
  • Saffar, Walid

Abstract

We investigate the political determinants of residual state ownership for a unique database of 221 privatized firms operating in 27 emerging countries over the 1980 to 2001 period. After controlling for firm-level and other country-level characteristics, we find that the political institutions in place, namely, the political system and political constraints, are important determinants of residual state ownership in newly privatized firms. Unlike previous evidence that political ideology is an important determinant of privatization policies in developed countries, we find that right- or left-oriented governments do not behave differently in developing countries. These results confirm that privatization is politically constrained by dynamics that differ between countries.

Suggested Citation

  • Boubakri, Narjess & Cosset, Jean-Claude & Guedhami, Omrane & Saffar, Walid, 2011. "The political economy of residual state ownership in privatized firms: Evidence from emerging markets," Journal of Corporate Finance, Elsevier, vol. 17(2), pages 244-258, April.
  • Handle: RePEc:eee:corfin:v:17:y:2011:i:2:p:244-258
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    Cited by:

    1. Ben-Nasr, Hamdi, 2016. "Labor protection and government control: Evidence from privatized firms," Economic Modelling, Elsevier, vol. 52(PB), pages 485-498.
    2. Borisova, Ginka & Cowan, Arnold R., 2014. "Government asset sales, economic nationalism, and acquirer wealth effects," Journal of Corporate Finance, Elsevier, pages 351-368.
    3. Ben-Nasr, Hamdi & Cosset, Jean-Claude, 2014. "State Ownership, Political Institutions, and Stock Price Informativeness: Evidence from Privatization," Journal of Corporate Finance, Elsevier, pages 179-199.
    4. Cabeza-García, Laura & Gómez-Ansón, Silvia, 2011. "Post-privatisation ownership concentration: Determinants and influence on firm efficiency," Journal of Comparative Economics, Elsevier, pages 412-430.
    5. Boubakri, Narjess & Cosset, Jean-Claude & Saffar, Walid, 2013. "The role of state and foreign owners in corporate risk-taking: Evidence from privatization," Journal of Financial Economics, Elsevier, vol. 108(3), pages 641-658.
    6. Ben-Nasr, Hamdi, 2016. "State and foreign ownership and the value of working capital management," Journal of Corporate Finance, Elsevier, pages 217-240.
    7. Boubakri, Narjess & Guedhami, Omrane & Saffar, Walid, 2016. "Geographic location, foreign ownership, and cost of equity capital: Evidence from privatization," Journal of Corporate Finance, Elsevier, pages 363-381.
    8. Saffar, Walid, 2014. "The political economy of share issue privatization: International evidence," Journal of Multinational Financial Management, Elsevier, pages 1-18.
    9. Belkhir, Mohamed & Ben-Nasr, Hamdi, 2016. "Labor protection and the privatization or partial privatization method," International Review of Economics & Finance, Elsevier, vol. 44(C), pages 305-322.
    10. Liu, Yi & Li, Xue & Lahiri, Sajal, 2016. "Determinants of privatization in China: The role of the presence of foreign firms," China Economic Review, Elsevier, vol. 41(C), pages 196-221.

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