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Government asset sales, economic nationalism, and acquirer wealth effects

Listed author(s):
  • Borisova, Ginka
  • Cowan, Arnold R.

We analyze acquirer wealth effects using a comprehensive sample of government asset sale announcements in 123 countries around the world in 1984–2009. Overall, we find positive abnormal returns to acquirers of state-owned assets. Returns are greater when the acquirer is domestic, when the sale occurs in a developing nation, and when the acquirer itself is not a former state-owned enterprise. Buyers of bailed-out firms experience average abnormal returns of 3.16%, compared to 0.70% for all other government sales. Our results suggest that the market favors acquirers that benefit from divesting governments driven by economic nationalism rather than sale revenue maximization.

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File URL: http://www.sciencedirect.com/science/article/pii/S0929119914001163
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Article provided by Elsevier in its journal Journal of Corporate Finance.

Volume (Year): 29 (2014)
Issue (Month): C ()
Pages: 351-368

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Handle: RePEc:eee:corfin:v:29:y:2014:i:c:p:351-368
DOI: 10.1016/j.jcorpfin.2014.09.011
Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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