Abstract
The aftermarket performance of eleven privatization Initial Public Offers (IPOs) in Chile during 1984-1989 is studied in this document, and a detailed description of the economic and political conditions that prevailed is provided. In particular, we discuss the operational details of the stock issuing mechanism, complemented with a statistical study on the IPOs’ Market Adjusted Returns. While the sample size is limited and does not support a significant external validity, the analysis confirms the presence of aftermarket performance patterns that are very similar to those observed in private and privatization IPOs reported elsewhere (Aggarwal, Leal and Hernández, 1993; Dewenter and Malatesta, 1997; Loughran, Ritter and Rydqvist, 1994; Perotti and Guney, 1993).
Highlights
Privatization of State Owned Enterprises (SOEs) acquired great relevance during the 1980s and 1990s in both, developed and emerging countries
While the sample size is limited and does not support a significant external validity, the analysis confirms the presence of aftermarket performance patterns that are very similar to those observed in private and privatization Initial Public Offers (IPOs) reported elsewhere (Aggarwal, Leal and Hernández, 1993; Dewenter and Malatesta, 1997; Loughran, Ritter and Rydqvist, 1994; Perotti and Guney, 1993)
ESTUDIOS Stock market wealth-effects during privatization initial public offers in Chile (1984-1989) GERENCIALES
Summary
Privatization of State Owned Enterprises (SOEs) acquired great relevance during the 1980s and 1990s in both, developed and emerging countries. Different authors find that privatization reduces government intervention in the economy, along with public sector spending when subsidies to frequently inefficient operations are eliminated (e.g., Galal et al, 1994; Hachette and Lüders, 1994; Indacochea, 1993). Another collection of studies has focused on the price performance of privatization IPO’s shares and their long-run aftermarket performance for both emerging and developed markets. ESTUDIOS Stock market wealth-effects during privatization initial public offers in Chile (1984-1989) GERENCIALES short-run underpricing and long-run underperformance of Chilean privatized companies’ shares.[5]. TRADITIONAL THEORIES ON THE SHORT-RUN UNDERPRICING AND LONGRUN UNDERPERFORMANCE OF IPOs
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