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We compare initial offer prices in privatizations to initial prices in public offerings of private companies. The evidence indicates that government officials in the United Kingdom underprice IPOs significantly more than their private company counterparts. In Canada and Malaysia, however, the opposite is true. There does not appear to be a general tendency for privatizations to be underpriced to a greater degree than private company IPOs. We provide additional evidence on the determinants of privatization initial returns. Our findings indicate that initial returns are significantly higher in relatively primitive capital markets and for privatized companies in regulated industries.

We compare dividend policies of U.S. and Japanese firms, partitioning the Japanese data into keiretsu, independent, and hybrid firms. We examine the correlation between dividend changes and stock returns, and the reluctance to change dividends. Results are consistent with the joint hypotheses that Japanese firms, particularly keiretsu-member firms, face less information asymmetry and fewer agency conf licts than U.S. firms, and that information asymmetries and0or agency conf licts affect dividend policy. Japanese firms experience smaller stock price reactions to dividend omissions and initiations, they are less reluctant to omit and cut dividends, and their dividends are more responsive to earnings changes.

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We compare initial offer prices in privatizations to initial prices in public offerings of private companies. The evidence indicates that government officials in the United Kingdom underprice IPOs significantly more than their private company counterparts. In Canada and Malaysia, however, the opposite is true. There does not appear to be a general tendency for privatizations to be underpriced to a greater degree than private company IPOs. We provide additional evidence on the determinants of privatization initial returns. Our findings indicate that initial returns are significantly higher in relatively primitive capital markets and for privatized companies in regulated industries.THIS ARTICLE EXAMINES PRIVATIZATION of state-owned enterprises through public offerings of common stock. We take a global perspective and discuss privatization events in Canada, France, Hungary, Japan, Malaysia, Poland, Thailand, and the United Kingdom (U.K.). The focus is on the pricing of initial public offerings (IPOs) of state-owned companies and the initial returns to investors who participate in these offerings.There is abundant evidence that initial public offerings of privately-owned companies tend to be underpriced. Jbbotson (1975), Jbbotson, Sindelar, and Ritter (1988), Logue (1973), McDonald and Fisher (1972), and Ritter (1984, 1991) study IPOs in the United States. All conclude that, on average, initial offer prices are significantly less than early after-market prices. Moreover, IPO underpricing is not peculiar to the United States. Loughran, Ritter and Rydqvist (1994) review more than 30 studies of IPOs in 25 countries (including the United States). In every case, the evidence indicates that IPOs are under-* University of Washington. We appreciate comments from 1659 1660The Journal of Finance priced, on average, providing large initial returns to investors who are able to buy shares at the offer price.The evidence on initial public offerings of state-owned companies, although less extensive, is consistent with that on privately-owned companies. Vickers and Yarrow (1988) and Jacquillat (1987) report on privatizations in the U.K. and France, respectively. Jenkinson and Mayer (1988) analyze privatizations in both of these countries. Perotti and Guney (1993) provide relevant evidence on offer pricing for privatizations in Malaysia, Spain, and Turkey, as well as France and the United Kingdom. Jones, Megginson, Nash, and Netter (1996) treat a sample of privatizations in many different nations. Uniformly, the evidence presented in these studies indicates that IPOs of state-owned companies, like those of privately-owned companies, tend to be underpriced.Despite the voluminous literature on IPOs, work explicitly comparing offers of state-owned companies, privatization IPOs, to those of privately-owned companies is scarce. Vickers and Yarrow (1988), Jenkinson and Mayer (1988), Jacquillat (1987), and Perotti and Guney (1993) all suggest that underpricing is greater for IPOs of state-owned than for privately-owned firms. This conclusio...

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