Chapter 23: An empirical analysis of cross-listing decisions in share-issue privatizations: evidence from developed and developing countries
Privatization, the sale of previously state-owned enterprises (SOEs) to private investors, has transformed financial markets around the world. An economic and political event as profound as privatization raises many important questions, such as why governments privatize, how they privatize, and where (in which markets) governments choose to sell shares. As summarized in Megginson and Netter (2001) and Estrin et al. (2009), financial economists have thoroughly examined the ‘why’ question (Megginson et al., 1994;Dewenter and Malatesta, 1997; Boubakri and Cosset, 1998) and the ‘how’ question(Boycko et al.,1996; Jones et al., 1999; Megginson et al., 2004). On the other hand, the ‘where’ question has received less attention. In this chapter we identify factors that affect a government’s decision regarding whereto privatize. We specifically examine the firm-level and institution-level factors that may affect why some share-issue privatizations (SIPs) are conducted entirely on domestic equity markets while others involve cross-listings, whereby all or part of the offering is done on a foreign equity market.
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