All Clear for Takeoff: Evidence from Airports on the Effects of Infrastructure Privatization

97 Pages Posted: 5 Oct 2022 Last revised: 18 Apr 2024

See all articles by Sabrina T Howell

Sabrina T Howell

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER)

Yeejin Jang

UNSW Australia Business School, School of Banking and Finance

Hyeik Kim

University of Alberta - School of Business

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: April 8, 2024

Abstract

We study how privatization and four variants of private ownership type affect infrastructure performance, focusing on global airports over 25 years. Privatization in general does not improve performance. However, private equity (PE) ownership has strong and persistent positive effects on measures of efficiency, volume, and quality. To address selection, we use close auctions in which both PE and non-PE firms bid. The disparities across ownership types are related to fees charged to airlines, physical capacity expansion, local state capacity, and the presence of a state-owned flag carrier. Overall, PE-owned airports benefit from high-powered incentives and access to capital.

Keywords: Infrastructure, Privatization, PE, Airports

JEL Classification: G32, G38, L32, R42, H54

Suggested Citation

Howell, Sabrina T and Jang, Yeejin and Kim, Hyeik and Weisbach, Michael S., All Clear for Takeoff: Evidence from Airports on the Effects of Infrastructure Privatization (April 8, 2024). Fisher College of Business Working Paper No. 2022-03-010, Charles A. Dice Center Working Paper No. 2022-10, European Corporate Governance Institute – Finance Working Paper No. 850/2022, UNSW Business School Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=4237006 or http://dx.doi.org/10.2139/ssrn.4237006

Sabrina T Howell (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States
212-998-0913 (Phone)

HOME PAGE: http://www.sabrina-howell.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yeejin Jang

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

Hyeik Kim

University of Alberta - School of Business ( email )

2-43 Business Building
Edmonton, Alberta T6G 2C7
Canada

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
408
Abstract Views
1,564
Rank
133,583
PlumX Metrics