The Short-Run Performance of IPOs of Privately and Publicly-Owned Firms: International Evidence

This article compares the initial returns of privatization initial public offerings to those of privately-owned enterprises and investigates the determinants of short-run performance of privatization IPOs, using a sample of 185 privatization IPOs from 30 countries over the period from 1981 to 1997. The evidence indicates that there is a general tendency for privatizations to be underpriced to a greater degree than the initial public offerings of privately-owned enterprises. The cross-sectional determinants of privatization initial returns are analyzed. The results strongly support the theoretical models of Perotti (1995) and Biasis and Perotti (1997).