Government asset sales, economic nationalism, and acquirer wealth effects

Ginka Borisova and Arnold Cowan ()

Journal of Corporate Finance, 2014, vol. 29, issue C, 351-368

Abstract: 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.

Keywords: Government; Privatization; Asset sales; Corporate governance; Bailouts (search for similar items in EconPapers)
JEL-codes: G34 L33 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:29:y:2014:i:c:p:351-368

DOI: 10.1016/j.jcorpfin.2014.09.011

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