Why Do Governments Sell Privatised Companies Abroad?

45 Pages Posted: 16 May 2000

See all articles by Bernardo Bortolotti

Bernardo Bortolotti

Bocconi University; University of Turin

Marcella Fantini

National Economic Research Associates Inc. (NERA)

Carlo Scarpa

University of Brescia; NERA Economic Consulting

Date Written: March 2000


This paper provides an empirical analysis of Governments' decisions to sell privatised companies on both international and domestic markets in a sample of 392 privatisations in 42 countries in the 1977-1998 period. Political theories of privatisation find strong support in our analyses: market oriented Governments favour domestic investors in the allocation of shares. The need to expose the company to global competition, to penetrate foreign markets and to warrant better legal protection to shareholders also appears as relevant. Significant differences emerge in OECD and non-OECD countries. In wealthy economies stock market liquidity favours cross-listing, while in emerging countries Governments resort to cross-listing in order to "import" liquidity and to develop domestic stock markets. Legal institutions also play a different role. In OECD countries, weak shareholder protection induces Governments to cross-list, in order to borrow the reputation and best practices of established exchanges. On the other hand, creditors' protection is more relevant in non-OECD countries, where weak legal protection of creditors reduces the scope of bank finance, forcing Governments to look for funds abroad.

JEL Classification: L33, G15, G30, K22

Suggested Citation

Bortolotti, Bernardo and Fantini, Marcella and Scarpa, Carlo, Why Do Governments Sell Privatised Companies Abroad? (March 2000). Available at SSRN: https://ssrn.com/abstract=222990 or http://dx.doi.org/10.2139/ssrn.222990

Bernardo Bortolotti (Contact Author)

Bocconi University ( email )

Via Sarfatti 25
Milan, MI 20136

University of Turin

Via Po 53
Torino, Turin - Piedmont 10100

Marcella Fantini

National Economic Research Associates Inc. (NERA) ( email )


Carlo Scarpa

University of Brescia ( email )

Via San Faustino 74B
Dipartimento di Scienze Economiche
25122 Brescia
+39+030+2988+833 (Phone)
+39+030+2988+839/840 (Fax)

NERA Economic Consulting ( email )

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White Plains, NY 10606
United States

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