Privatization: public offerings and political objectives

Germà Bel

Applied Economics, 2002, vol. 34, issue 11, 1421-1432

Abstract: This paper empirically analyses the political and economic objectives underlying privatization on the stock market. Particularly, the factors of SIPs underpricing, are explained, and the study analyses whether the change of political parties in government play a role on the issue. The paper has two main findings. First, larger initial returns occurred in the early stages of privatization. Second, the change of government from left-wing to right-wing did not lead to significantly higher levels of underpricing. The results show that governments are quite pragmatic with respect to underpricing: maximizing proceeds from SIPs shows to be more important than ideological differences between parties in government.

Date: 2002
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DOI: 10.1080/00036840110100826

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