A Cure Rather than a Disease: Government Ownership and Minority Shareholder Protection

Mihail K. Miletkov ()
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Mihail K. Miletkov: University of New Hampshire, USA

Multinational Finance Journal, 2014, vol. 18, issue 1-2, 1-41

Abstract: The governments which undertake privatization of their state owned enterprises often maintain some ownership in the newly privatized firms. This paper examines the effect of the presence of the government as a minority shareholder on the protection of the minority shareholders in privatized firms. Consistent with the government’s incentive to foster security market development and to enlist the support of the median-class voters for the privatization process we find that the government effectively monitors the controlling shareholders in the newly privatized firms and curbs their ability to expropriate the minority shareholders. Furthermore, the evidence suggests that minority government ownership acts as a substitute for the lack of alternative mechanisms for minority shareholder protection.

Keywords: privatization; private benefits of control; government ownership; investor protection (search for similar items in EconPapers)
JEL-codes: F30 G30 G32 G38 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:mfj:journl:v:18:y:2014:i:1-2:p:1-41

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