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

37 Pages Posted: 9 Oct 2009 Last revised: 5 Nov 2009

See all articles by Omrane Guedhami

Omrane Guedhami

University of South Carolina - Moore School of Business

Jean-Claude Cosset

HEC Montreal

Narjess Boubakri

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

Walid Saffar

Hong Kong Polytechnic University - School of Accounting and Finance

Abstract

We investigate the control structure of 221 privatized firms from 27 emerging countries over the period 1980 to 2001. 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 increases the explanatory power of the models, and shows that government tenure (stability), the political system and political cohesion are also important determinants of the residual state ownership in newly privatized firms. This result confirms that privatization is politically shaped and constrained, and hence obeys to a dynamic that is different from one country to another.

Keywords: privatization, control structure, political institutions, performance

JEL Classification: G32, G38

Suggested Citation

Guedhami, Omrane and Cosset, Jean-Claude and Boubakri, Narjess and Saffar, Walid, The Political Economy of State Residual Ownership in Privatized Firms: Evidence from Emerging Markets. Paris December 2009 Finance International Meeting AFFI - EUROFIDAI. Available at SSRN: https://ssrn.com/abstract=1483708 or http://dx.doi.org/10.2139/ssrn.1483708

Omrane Guedhami (Contact Author)

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

Columbia, SC
United States

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)

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

Walid Saffar

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

Li Ka Shing Tower
Hong Hum
Kowloon
Hong Kong

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