The Long-Run Stock Performance of Privatization IPOs

28 Pages Posted: 30 Jun 2015

See all articles by Seung-Doo Choi

Seung-Doo Choi

Dongeui University - School of Business

Sang Koo Nam

Korea University

Date Written: June 30, 2015

Abstract

This paper compares the long-run buy-and-hold returns of privatization initial public offerings (IPOs) to those of the domestic stock markets of respective countries using a sample of 241 privatization IPOs from 41 countries. The evidence indicates that the privatization IPOs significantly outperform their domestic stock markets if the returns are equally-weighted while value-weighted returns show a sharp reduction in performance. However, there are substantial variations in the long-run performance of privatization IPOs across industries, issuing countries, issue period, and the origin of commercial law of the country. This paper also analyzes the cross-sectional determinants of the long-run buy-and-hold returns of privatization shares. The results indicate that the long-run performance of privatization IPOs is significantly related to the proxies of policy uncertainty, consistent with the signaling models of Perotti (1995).

Keywords: privatization; IPO; policy uncertainty; CAR; BHAR

JEL Classification: G32

Suggested Citation

Choi, Seung-Doo and Nam, Sang Koo, The Long-Run Stock Performance of Privatization IPOs (June 30, 2015). Multinational Finance Journal, Vol. 10, No. 3/4, p. 223-250, 2006, Available at SSRN: https://ssrn.com/abstract=2625007

Seung-Doo Choi (Contact Author)

Dongeui University - School of Business ( email )

Busan, Busan
Korea

Sang Koo Nam

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
26
Abstract Views
597
PlumX Metrics