The Choice of Private Versus Public Capital Markets: Evidence from Privatizations

35 Pages Posted: 10 Nov 2001

See all articles by Robert C. Nash

Robert C. Nash

Wake Forest University

Jeffry M. Netter

Department of Finance; University of Georgia Law School

William L. Megginson

University of Oklahoma

Annette B. Poulsen

University of Georgia - Department of Banking and Finance

Date Written: October 2, 2001

Abstract

Using a sample of 2477 privatizations from 108 countries that raised $1.2 trillion between 1977 and 2000, we analyze the choice between raising funds in public versus private capital markets. This choice is influenced by capital market, political, and firm-specific factors. Share issue privatizations (sales of shares through public equity markets) are more likely in less developed capital markets, probably as a way to help develop capital markets, and for larger and more profitable state-owned enterprises. In contrast, asset sales (sales to a small group of investors using private capital markets) are more likely to occur where governments respect property rights, and are thus not expected to expropriate the privatized assets.

JEL Classification: G10, L33, N20

Suggested Citation

Nash, Robert C. and Netter, Jeffry M. and Megginson, William L. and Poulsen, Annette B., The Choice of Private Versus Public Capital Markets: Evidence from Privatizations (October 2, 2001). EFMA 2002 London Meetings; University of Oklahoma, Michael F. Price College of Business Working Paper. Available at SSRN: https://ssrn.com/abstract=289882 or http://dx.doi.org/10.2139/ssrn.289882

Robert C. Nash

Wake Forest University ( email )

2601 Wake Forest Road
Winston-Salem, NC 27109
United States

Jeffry M. Netter (Contact Author)

Department of Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States
706-542-4450 (Phone)

HOME PAGE: http://www.terry.uga.edu/directory/profile/jnetter/

University of Georgia Law School

225 Herty Drive
Athens, GA 30602
United States

William L. Megginson

University of Oklahoma ( email )

307 W Brooks, 205A Adams Hall
Norman, OK 73019
United States
(405) 325-2058 (Phone)
(405) 325-1957 (Fax)

HOME PAGE: http://faculty-staff.ou.edu/M/William.L.Megginson-

Annette B. Poulsen

University of Georgia - Department of Banking and Finance ( email )

Terry College of Business
Department of Finance
Athens, GA 30602-6253
United States
706-542-4450 (Phone)

HOME PAGE: http://www.terry.uga.edu/directory/profile/apoulsen/

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