Do Privatization IPOs Outperform in the Long Run?

Choi, Seung-Doo; Lee, Inmoo; Megginson, William L.

doi:10.1111/j.1755-053x.2010.01069.x

Cited by 32 publications

(8 citation statements)

References 93 publications

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“…However, when size or size-and-B/M are used as a benchmark, we note that firms continue to have a positive long term performance over one, two and three years, although we lose significance. These results are consistent with the finding of Megginson, Lee and Choi (2010) who show that privatized firms outperform their market benchmark, but over three or five years the size and B/M adjusted returns become non significant.…”

Section: Wwwccsenetorg/ijefsupporting

confidence: 91%

Investor Pessimism and Post-Issue Outperformance: Evidence from Privatized Firms

Bouslimi

2013

IJEF

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Using a unique sample of privatized firms over the period 1980 and 2002, we explore how the policy risk which is a distinctive feature of privatization is perceived by investors and whether the post issue outperformance of these firms is associated to investor pessimism. We find evidence that market-adjusted abnormal returns are negatively related to analysts forecast errors used as a proxy for investor expectations. This result suggests that contrary to traditional private firms investors seem to be pessimistic in their forecasts of privatized firms' earnings projections in the beginning of the privatization procedure. However, they are more confident in the prospects of these firms over time consistent with the positive performance we find after privatization.

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Section: Wwwccsenetorg/ijefsupporting

confidence: 91%

Investor Pessimism and Post-Issue Outperformance: Evidence from Privatized Firms

Bouslimi

2013

IJEF

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“…This pattern is not reported in most studies of PIPO buyand-hold strategies (Levis [51] and Menyah et al [60] for the United Kingdom, Jelic and Briston [26] for Hungary, Paudyal et al [24] for Malaysia, Boardman and Laurin [61], Foerster and Karolyi [62], Dewenter and Malatesta [31], Perotti and Oijen [63], and Megginson et al [64] for multicountry samples). With opposite results, and thus in line with IPO empirical evidence, we find Aggarwal et al [20] for Chile, although with a sample of only 9 PIPO, Almeida and Duque [5] and Vieira and Serra [4] for Portugal, Bülent Aybar [65] for a multinational sample of American Depositary Receipts, Omran [29] for Egypt, and Choi et al [66] for a multinational sample and using size-matched benchmarks.…”

Section: Long-run Returnssupporting

confidence: 76%

The Pricing of Portuguese Privatisation Second Initial Public Offerings

Alpalhão¹

2014

ISRN Economics

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The paper studies the pricing of PSIPOs (privatization second initial public offerings) PIPOs of companies that had been public in the past. A dataset comprising all the Portuguese companies nationalized in 1975 and privatized in the late eighties and nineties is used. Findings on short- and long-run pricing of IPOs and PIPOs are summarized, and implications for the pricing of PSIPOs are discussed. Short- and long-run returns are computed, using three alternative methods (buy and hold abnormal returns, wealth relatives, and cumulative abnormal returns) in the long-run analysis. Short-run overpricing is identified, unlike the underpricing pattern revealed by most IPO research. This initial overpricing is essentially found to be corrected in the first trading month. In the long-run, no evidence of overpricing is found, again unlike the usual conclusion of the IPO literature, and more in line with empirical evidence on second IPOs. Results provide support to the conclusion that privatization IPOs tend to be less underpriced than standard IPOs and that firms coming back to the market for a second IPO tend to be less underpriced than pure IPOs and provide a good rating for the performance of the Portuguese Republic pricing stocks in the Portuguese privatization program.

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“…The three‐year BHRs of IPO firms are calculated starting at the end of 126 trading days following lockup expiration and ending on the three‐year anniversary (756 trading days) after the end of 126 trading days or on the delisting date of the IPO firm if the delisting occurs before three years have expired. We matched each IPO firm to a non‐IPO firm, using two sets of criteria: 1) one set included only size and the book‐to‐market ratio at the end of the lockup expiration month (Choi, Lee, and Megginson, 2010), and 2) the other set included industry, size, and the book‐to‐market ratio (Klein and Rosenfeld, 2010). The industry is measured by four‐digit (three‐, two‐, and one‐digit if no more than one firm is available) standard industrial classification (SIC) codes.…”

Section: Methodsmentioning

confidence: 99%

Why Do Insiders Sell Shares Following IPO Lockups?

Chen¹,

Chen²,

Huang³

2012

Financial Management

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We examine long run returns subsequent to the lockup expiration of firms having gone public. We find that returns are negatively associated with abnormal selling by senior executives but unrelated to selling by other insiders. Our results suggest that even though lockup expirations provide an initial opportunity for insiders to diversify their holdings by selling a firm's shares, sales by senior executives are still motivated in part by private information. Sales by other insiders, on the other hand, are consistent with portfolio diversification.

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Do Privatization IPOs Outperform in the Long Run?

Cited by 32 publications

References 93 publications

Investor Pessimism and Post-Issue Outperformance: Evidence from Privatized Firms

Investor Pessimism and Post-Issue Outperformance: Evidence from Privatized Firms

The Pricing of Portuguese Privatisation Second Initial Public Offerings

Why Do Insiders Sell Shares Following IPO Lockups?

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