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Abnormal Returns in Privatization Public Offerings: The case of Portuguese firms

  • Carla Vieira

    (Faculty of Economics, University of Oporto)

  • Ana Paula Serra

    (Faculty of Economics, University of Oporto)

Registered author(s):

    This paper provides evidence on abnormal returns of Portuguese privatization public offerings for the period from 1989 to 2001. This study explores the abnormal performance of a comprehensive sample of Portuguese privatization transactions and investigates the determinants of the observed price behavior. We find some evidence of the underpricing phenomenon for privatized offerings but initial returns are low and barely significant. The results show further that privatization IPOs underperform private sector IPOs. In the long run, we observe negative abnormal returns. While in early event months, privatization public offerings yield more negative returns than private sector offerings, this effect is reversed in longer horizon periods. Initial underpricing is thus partially reversed and investors seem to require higher returns in partial privatizations.

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    File URL: http://notas-economicas.fe.uc.pt/texts/ne023n0173.pdf
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    Article provided by Faculdade de Economia, Universidade de Coimbra in its journal Notas Económicas.

    Volume (Year): (2006)
    Issue (Month): 23 (June)
    Pages: 6-34

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    Handle: RePEc:gmf:journl:y:2006:i:23:p:6-34
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    11. William L. Megginson & Robert C. Nash & Jeffry Netter & Adam L. Schwartz, 2000. "The Long-Run Return to Investors in Share Issue Privatizations," Financial Management, Financial Management Association, vol. 29(1), Spring.
    12. Jones, Steven L. & Megginson, William L. & Nash, Robert C. & Netter, Jeffry M., 1999. "Share issue privatizations as financial means to political and economic ends," Journal of Financial Economics, Elsevier, vol. 53(2), pages 217-253, August.
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    14. 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.
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