Do Privatizations Boost Household Shareholding? Evidence from Italy
Adolfo Di Carluccio
Ministry of the Economy and Finance, Government of the Republic of Italy
Maria Assunta Free University
Government of the Italian Republic (Italy) - Department of the Treasury
Government of the Italian Republic (Italy) - Ministry of Economy and Finance - RGS
FEEM Working Paper No. 03.2004
It is believed that privatizations substantially contributed to boost stock markets through the 1980s and 1990s. However, through which channels did that materialize? We test whether privatizations - improving households' acquaintance with the risk and return characteristics of stocks through the massive accompanying advertising campaigns - boosted demand for stocks by enlarging the set of households willing to invest in shares. We use a unique micro-data set collected for a large sample of Italian households on Public Offerings (PO) during 1995-99, the climax of privatizations in Italy. We show that advertising increased the notoriety of the incoming PO at households, and through this furthered households' propensity to subscribe that PO. Furthermore, the propensity to subscribe the incoming PO also increased as households became better informed about past privatizations. Thus, privatizations expanded households' share participation in Italy.
Number of Pages in PDF File: 37
Keywords: Household portfolio choice, Information, Privatizations
JEL Classification: D140, D820, E440, G110working papers series
Date posted: March 12, 2004
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo3 in 0.390 seconds