Liability for Past Environmental Contamination and Privatization
This paper examines the role ofliability for past environmental contaminationin the privatization processes of Central andEastern Europe. In particular, it establishes alink between a risk-averse investor's amount ofinformation regarding the extent of pastenvironmental contamination (and its cleanupcosts) and the investor's willingness to payfor a particular enterprise, i.e., bid. As theinvestor obtains a more precise estimate of theuncertain cleanup costs, the investor facesless risk; therefore, the investor's riskpremium falls and the investor's bid rises.This link generates four hypotheses regarding aprivatization agency's responses to theinvestor's knowledge of clean-up costs. Copyright Kluwer Academic Publishers 2004
Volume (Year): 29 (2004)
Issue (Month): 1 (September)
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