The post-privatization financial performance of former state-owned enterprises

Operating and stock market performance of state-owned enterprise privatizations: The Spanish experience

“…For the sake of brevity, we present only the intercepts and the adjusted R-squared from the OLS regressions of model (2) (both of them expressed in percentage). Unlike the evidence achieved in multinational-sample studies in which Spanish SIPs are included (Comstock et al, 2003) we do not find statistically significant abnormal performance in any of the time horizons analysed both for initial and seasoned equity offerings as well as whatever weighted scheme we use when computing the event-portfolio returns. We analyse stock market performance during the 12, 24 and 36 months following the issue.…”

“…Hence, multi-country studies show significant long-term underperformance in Aggarwal et al (1993) and Comstock et al (2003), but significant overperformance in Boardman and Laurin (2000), Boubakri and Cosset (2000), , Megginson et al (2000) and Dewenter and Malatesta (2001). Foerster and Karolyi (2000) do not find significant abnormal long-term performance when they examine long-run returns for 333 non-US firms that list stock on US markets.…”

“…However, only a few studies exist that analyse the market performance of SIPs. Comstock, Kish, and Vasconcellos (2003) claim that SIPs are expected to have a stock market performance similar to private-sector equity public offerings. Accordingly, state-owned firm privatizations reveal two key characteristics analogous to privately-owned firms, that is, initial underpricing and long-term underperformance.…”

“…For instance, D'Souza and include only one Spanish SOE,Comstock et al (2003) incorporate three, and D'Souza,Megginson, and Nash (2005) -which to our knowledge is the multi-country study that uses the largest Spanish SOE sample -comprise seven.4 Some important problems are sample selection bias (as governments tend to privatize the more profitable SOEs through SIPs), data availability and consistency, or proper performance measurement(Megginson & Netter, 2001).…”

Underpricing and aftermarket performance of American depositary receipts (ADR) IPOs

“…Comstock et al (2003) define privatization as ''the process through which a government transfers ownership of assets and control of commercial activities to the private sector''. Pagano et al (2002) argue that privatized companies are more likely to list abroad as governments try to capture enhanced market value for their stake.…”