The Political Economy of Residual State Ownership in Privatized Firms: Evidence from Emerging Markets

41 Pages Posted: 5 Oct 2009

See all articles by Narjess Boubakri

Narjess Boubakri

American University of Sharjah - School of Business and Management; HEC Montreal - Department of Finance

Jean-Claude Cosset

HEC Montreal

Omrane Guedhami

University of South Carolina - Moore School of Business

Walid Saffar

Hong Kong Polytechnic University - School of Accounting and Finance

Date Written: October 5, 2009

Abstract

To investigate the control structure of newly privatized firms, we use a unique database of 221 privatized firms operating in 27 emerging countries over the 1980-2001 period. Specifically, we examine the determinants of residual state ownership after privatization over a window of up to six years after divestiture. We find that the residual state ownership is largely influenced by the size of the firm, the level of investor protection and the extent of corruption in the country. Controlling for the political institutions in place shows that government tenure (stability), the political system and political cohesion are important determinants of the residual state ownership in newly privatized firms. This result confirms that privatization is politically shaped and constrained by a dynamic that will differ between countries.

Keywords: Privatization, Control structure, Political institutions, Performance, Emerging markets

JEL Classification: G32

Suggested Citation

Boubakri, Narjess and Cosset, Jean-Claude and Guedhami, Omrane and Saffar, Walid, The Political Economy of Residual State Ownership in Privatized Firms: Evidence from Emerging Markets (October 5, 2009). Available at SSRN: https://ssrn.com/abstract=1483284 or http://dx.doi.org/10.2139/ssrn.1483284

Narjess Boubakri

American University of Sharjah - School of Business and Management ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

HOME PAGE: http://www.aus.edu

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Jean-Claude Cosset

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-6872 (Phone)
514-340-6987 (Fax)

Omrane Guedhami

University of South Carolina - Moore School of Business ( email )

Columbia, SC
United States

Walid Saffar (Contact Author)

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Li Ka Shing Tower
Hong Hum
Kowloon
Hong Kong

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