Abstract

http://ssrn.com/abstract=536683
 
 

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Government Control of Privatized Firms


Bernardo Bortolotti


Università di Torino

Mara Faccio


Purdue University - Krannert School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

May 2007

ECGI - Working Paper No. 40/2004
FEEM Working Paper No. 130.04
EFA 2005 Moscow Meetings Paper
AFA 2006 Boston Meetings Paper

Abstract:     
We study the change in government control of privatized firms in OECD countries. Results indicate that governments typically transfer ownership rights without relinquishing proportional control. Control is commonly retained by leveraging state investments through pyramids, dual-class shares, and golden shares. Indeed, at the end of 2000, after the largest privatization wave in history, governments retain control of 62.4% of privatized firms. In civil law countries, governments tend to retain large ownership positions, whereas in common law countries they typically use golden shares. However, when we combine these two mechanisms, we find no association between a country's legal tradition and the extent of government control. Rather, we document more prevalent government influence over privatized firms in countries with proportional electoral rules and with a centralized system of political authority.

Number of Pages in PDF File: 41

Keywords: Privatization, Corporate Governance

JEL Classification: L33, D72, G15, H6, K22

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Date posted: August 14, 2005  

Suggested Citation

Bortolotti, Bernardo and Faccio, Mara, Government Control of Privatized Firms (May 2007). ECGI - Working Paper No. 40/2004; FEEM Working Paper No. 130.04; EFA 2005 Moscow Meetings Paper; AFA 2006 Boston Meetings Paper. Available at SSRN: http://ssrn.com/abstract=536683 or http://dx.doi.org/10.2139/ssrn.536683

Contact Information

Bernardo Bortolotti (Contact Author)
Università di Torino ( email )
Corso Unione Sovietica, 218 bis
10134 Torino, 13820-4020
Italy
+39 02 52036931 (Phone)
+39 02 52036946 (Fax)
Mara Faccio
Purdue University - Krannert School of Management ( email )
1310 Krannert Building
West Lafayette, IN 47907-1310
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
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