Public Offerings of State-Owned And Privately-Owned Enterprises: An International Comparison




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    • University of Washington. We appreciate comments from Wayne Ferson, Alister Hunt, Avi Kamara, Stacey Kole, Dennis Logue, Timothy Loughran, Brian McCulloch, Walter Novaes, Jeff Pontiff, Ed Rice, Jay Ritter, Frank Sader, seminar participants at UCLA, Vanderbilt University, the University of Texas, the University of Arizona, Ohio State University, and the University of Washington, and from the Journal of Finance referee and the editor, René Stulz. We thank Michael Schill and Kirati Laisathit, who helped gather the data used in this study. Financial support provided by the Center for International Business Education and Research at the University of Washington is gratefully acknowledged. An earlier version of this article was presented at the American Finance Association Annual Meetings, January 1996.


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.