Can Restructuring Gains Be Sustained Without Ownership Changes? Evidence From Withdrawn Privatizations

52 Pages Posted: 4 Aug 2018 Last revised: 25 Jul 2019

See all articles by Gabriele Lattanzio

Gabriele Lattanzio

Southern Methodist University (SMU) - Finance Department

William L. Megginson

University of Oklahoma

Date Written: July 24, 2019

Abstract

By employing a novel, hand-collected sample of withdrawn and completed share issue privatizations (SIPs) we show that both groups undergo comparable restructuring processes over the three years preceding the event. We employ a matching procedure to explicitly control for the identified restructuring effect, isolating the ultimate consequences of the ownership transfer from political to private investors on corporate policies and performance. We find that, absent the ownership transfer, most of the gains realized during the restructuring process are re-absorbed over the post-treatment period. Results are robust to the use of instrumental variables, indicating that the transition from state to private ownership represents a necessary condition for the long-term success of privatization programs.

Keywords: Privatization, International Financial Markets, Government Policy and Regulation

JEL Classification: G32, G38, G15

Suggested Citation

Lattanzio, Gabriele and Megginson, William L., Can Restructuring Gains Be Sustained Without Ownership Changes? Evidence From Withdrawn Privatizations (July 24, 2019). Available at SSRN: https://ssrn.com/abstract=3214756 or http://dx.doi.org/10.2139/ssrn.3214756

Gabriele Lattanzio

Southern Methodist University (SMU) - Finance Department ( email )

United States

William L. Megginson (Contact Author)

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-

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