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Operating and stock market performance of state-owned enterprise privatizations: The Spanish experience

Authors
Journal
International Review of Financial Analysis
1057-5219
Publisher
Elsevier
Publication Date
Volume
16
Issue
4
Identifiers
DOI: 10.1016/j.irfa.2007.01.001
Keywords
  • Spanish Privatization Process
  • Operating Performance
  • Underpricing
  • Long-Term Performance
Disciplines
  • Economics
  • Political Science

Abstract

Abstract We investigate the operating and stock market performance of Spanish state-owned enterprises (SOEs) privatized through public share issue offerings (SIPs) from 1990 to 2001, when the last SIP was conducted. We compare the performance of SOEs and privately-owned firms. We find significant operating improvements in Spanish SOEs after the privatization. Specifically, they show significant increases in income efficiency, real sales and employment. Spanish governments tried to minimize the foregone proceeds when selling SOE shares and underpriced them lower than private firms. We relate these results with the pressure of the Maastricht Treaty fiscal criteria, as well as lower information asymmetries between firms and investors. Finally, we do not find long-term abnormal stock market performance after SIPs.

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