Abnormal returns of UK privatizations: from underpricing to outperformance
Year: 2004
Type: article
Abstract: This paper offers a review and discussion of the evidence concerning the underpricing and long-run performance of British PIPOs (Privatization Initial Public Offerings) between 1977 and 1996, i.e. from the first privatization under a Labour Government (British Petroleum), until the last ones by a Conservative Government (Railtrack). More recent years are excluded because the change of government, the introduction of a windfall tax on excess profits of regulated utilities, and changes in the regulatory regime, mark a totally different landscape compared with the previous twenty years. Evidence is found that underpricing was not followed by underperformance, as is usually observed with IPOs, but rather strong outperformance. This trend is decomposed by subgroups within a 55 observations sample, and it is concluded that lax regulation was probably the main driving force of abnormal returns of British PIPOs.
Source: Applied Economics
Authors: Massimo Florio, Katiuscia Manzoni
Institution: University of Milan
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2093664375