Ownership Changes and Access to External Financing
U.S. Securities and Exchange Commission
U.S. Securities and Exchange Commission (SEC)
Joseph E. Stiglitz
Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)
December 29, 2008
Journal of Banking and Finance, Vol. 33, No. 10, pp. 1804-1816, 2009
This paper examines access to external financing in the privatization context and provides new evidence on the effects of financing constraints on performance and investment. Ownership reforms increase firms’ reliance on external financing. Empirically, performance and investment changes around ownership reforms are increasing in country-level measures of access to credit. The presence of a severe prior public financing constraint contributes to stronger investment growth after privatization. Privatized enterprises do not outperform publicly owned industries, all else given. Our analyses rely on new international sector- and firm-level data and correct for potential endogeneity of ownership changes.
Keywords: Privatization, Ownership, Access to credit, Performance, Investment
JEL Classification: G38, G31, L33
Date posted: July 23, 2008 ; Last revised: August 30, 2011
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