Can Governments signal commitment in privatization sales?
The literature on staggered privatization sales suggests that governments can effectively signal commitment to not expropriate the future rents of privatized firms. The privatization of telephone firms around the world provides an excellent opportunity to test this theory. Using a sample of repeated privatization sales I test whether governments can effectively signal commitment by selling ownership gradually and transferring managerial control immediately. The use of panel data with fixed-effects provides consistent estimates when commitment is not observed and time-invariant. Unobserved commitment is rendered time-invariant by using repeated sales within a government administration, typically within two years. The results cast doubt on the ability of governments to effectively signal commitment and increase the market value of firms in privatization sales. These results hold for several signals tested.
Volume (Year): 197 (2011)
Issue (Month): 2 (June)
|Contact details of provider:|| Postal: Avda. Cardenal Herrera Oria, 378, 28035 Madrid|
Web page: http://www.ief.es
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003.
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 34(1), pages 1-74.
- Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003. "Debt Intolerance," NBER Working Papers 9908, National Bureau of Economic Research, Inc.
- Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003. "Debt intolerance," MPRA Paper 13932, University Library of Munich, Germany.
- Reinhart, Carmen, 2004. "Debt intolerance: Executive summary," MPRA Paper 13398, University Library of Munich, Germany.
- Massimo Florio & Katiuscia Manzoni, 2004. "Abnormal returns of UK privatizations: from underpricing to outperformance," Applied Economics, Taylor & Francis Journals, vol. 36(2), pages 119-136.
- Bruno Viani, 2007. "Monopoly rights in the privatization of telephone firms," Public Choice, Springer, vol. 133(1), pages 171-198, October.
- Nakil Sung & Yong-Hun Lee, 2002. "Substitution between Mobile and Fixed Telephones in Korea," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(4), pages 367-374, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:hpe:journl:y:2011:v:197:i:2:p:87-110. 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: (Ana Belén Miquel Burgos)
If references are entirely missing, you can add them using this form.