Privatization and R&D Performance: An Empirical Analysis Based on Tobin's Q

43 Pages Posted: 1 Oct 2002

See all articles by Federico Munari

Federico Munari

University of Bologna - Department of Management

Raffaele Oriani

Luiss Guido Carli University

Date Written: September 2002

Abstract

In this paper, we analyze the impact of privatization on the firms' R&D performance. We expect that, in the early period after privatization, path dependencies still negatively affect the efficiency of R&D operations. We test our hypothesis using a Tobin's q measure and estimating a hedonic model, already adopted by several scholars to assess the impact of innovation related assets on the firm's market value (Griliches, 1981). We estimate the regression model on an original panel data of 40 firms, including 20 firms privatized through public share offering in different countries of Western Europe over the period 1982-1997 that were matched at the country and industry level with 20 publicly held firms. Our results show that stock markets evaluate R&D investments of newly privatized companies less than R&D investments of industry-matched companies.

Keywords: Privatization, R&D Performance, Market Value, Corporate Restructuring

JEL Classification: G34, O32

Suggested Citation

Munari, Federico and Oriani, Raffaele, Privatization and R&D Performance: An Empirical Analysis Based on Tobin's Q (September 2002). Available at SSRN: https://ssrn.com/abstract=331720 or http://dx.doi.org/10.2139/ssrn.331720

Federico Munari (Contact Author)

University of Bologna - Department of Management ( email )

Piazza Scaravilli 1
Bologna, Bologna 40126
ITALY
051-2093954 (Phone)
051-2093949 (Fax)

Raffaele Oriani

Luiss Guido Carli University ( email )

Viale Romania, 32
Rome, 00196
Italy
+390685225908 (Phone)

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