UNDERPRICING OF NEW EQUITY OFFERINGS BY PRIVATIZED FIRMS: AN INTERNATIONAL TEST

Huang Qi and Richard M. Levich ()
Additional contact information
Richard M. Levich: Stern School of Business, New York University, 44 W. 4th Street, New York, NY 10012, USA

International Journal of Theoretical and Applied Finance (IJTAF), 2003, vol. 06, issue 01, 1-30

Abstract: In this paper, we study a large sample of 507 privatization offerings from 39 countries over the period 1979–1996. Our objectives are twofold. First, we document the extent of short-run underpricing of these privatization offerings and measure their variation across countries, industries, and years, as well as drawing comparisons to private company IPOs. Second, we test alternative explanations of the determinants of short-run underpricing drawing on various models of maximizing behavior by underwriters, augmented by variables that proxy for national political objectives. Overall, we find support for elements of asymmetric information theory, investor sentiment theory and the reputation building hypothesis. With the exception of the Gini coefficient, our political proxy variables are typically not significant. Thus to a significant degree, the investment banking strategies believed to characterize IPOs of private companies in industrial countries may also play a role in the IPO strategies of state-owned-enterprises in both industrial and lesser developed economies.

Keywords: Privatization; underpricing; Initial Public Offerings; state-owned-enterprises (search for similar items in EconPapers)
Date: 2003
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S021902490300175X
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:ijtafx:v:06:y:2003:i:01:n:s021902490300175x

Ordering information: This journal article can be ordered from

DOI: 10.1142/S021902490300175X

Access Statistics for this article

International Journal of Theoretical and Applied Finance (IJTAF) is currently edited by L P Hughston

More articles in International Journal of Theoretical and Applied Finance (IJTAF) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().