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Publicization versus Privatization: Recent worldwide evidence

Author

Listed:
  • Stefano CLÒ

    (DEMM, Università degli Studi di Milano, Italy)

  • Chiara F. DEL BÒ

    (DEMM, Università degli Studi di Milano, Italy)

  • Matteo FERRARIS

    (DEMM, Università degli Studi di Milano, Italy)

  • Carlo FIORIO

    (DEMM, Università degli Studi di Milano, Italy)

  • Massimo FLORIO

    (DEMM, Università degli Studi di Milano, Italy)

  • Daniela VANDONE

    (DEMM, Università degli Studi di Milano, Italy)

Abstract

This paper analyzes deals involving private and State-owned enterprises (SOEs) worldwide since 2004. We consider four types of deals: privatizations, publicizations, private reorganizations (i.e private firms acquiring a private target) and public reorganizations. (i.e. both acquirers and targets are SOEs). We study whether the predeal performance and corporate characteristics of the acquirer and target companies vary across the four types of deals depending on ownership: public or private. Data are taken from Zephyr, which provides information on completed deals worldwide and Orbis, a firm-level dataset. The empirical analysis suggests the following. Some results of previous literature on M&As performed by private firms (‘the inefficiency management hypothesis’) are both confirmed and expanded. Acquirers involved in deals are both larger and better performing than their targets but some qualifications are in order with respect to ownership. The difference in size and performance between acquirers and targets is in fact more pronounced for public with respect to private acquirers. The evidence thus points to an active role of SOEs as acquires, as they significantly out-perform relative to their targets, including private ones, in terms of return on sales. Given these novel findings, further research is needed to examine the motivations behind the different types of deals considered and to verify the role of ownership.

Suggested Citation

  • Stefano CLÒ & Chiara F. DEL BÒ & Matteo FERRARIS & Carlo FIORIO & Massimo FLORIO & Daniela VANDONE, 2014. "Publicization versus Privatization: Recent worldwide evidence," CIRIEC Working Papers 1403, CIRIEC - Université de Liège.
  • Handle: RePEc:crc:wpaper:1403
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    File URL: http://www.ciriec.uliege.be/repec/WP14-03.pdf
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    References listed on IDEAS

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    Cited by:

    1. Stefano CLÒ & Matteo FERRARIS & Massimo FLORIO, 2015. "Public Enterprises in a Global Perspective in the Last Decade," Departmental Working Papers 2015-03, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

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    More about this item

    Keywords

    Publicization; Privatization; State-owned enterprises; M&As.;
    All these keywords.

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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