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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27229
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| Title: | Underpricing of New Equity Offerings by Privatized Firms: An
International Test |
| Authors: | Huang, Qi
Levich, Richard M. |
| Keywords: | Privatization
Underpricing
Initial public offerings
State-owned-enterprises |
| Issue Date: | 14-Sep-1999 |
| Series/Report no.: | FIN-99-075 |
| Abstract: | In this paper, we study a large sample of 507 privatization offerings
from 39 countries over the period 1979-1996. Our objectives are twofold.
First, we document the extent of short-run underpricing of these
privatization offerings and measure their variation across countries,
industries, and years, as well as drawing comparisons to private company
IPOs. Second, we test alternative explanations of the determinants of
short-run underpricing drawing on various models of maximizing behavior
by underwriters, augmented by variables that proxy for national
political objectives. Overall, we find support for elements of
asymmetric information theory, investor sentiment theory and the
reputation building hypothesis. With the exception of the Gini
coefficient, our political proxy variables are typically not
significant. Thus to a significant degree, the investment banking
strategies believed to characterize IPOs of private companies in
industrial countries may also play a role in the IPO strategies of
state-owned-enterprises in both industrial and lesser developed economies. |
| URI: | http://hdl.handle.net/2451/27229 |
| Appears in Collections: | Finance Working Papers
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