Hungarian Privatisation Strategy and Financial Performance of Privatised Companies

This paper examines Hungarian privatisation strategy and the financial performance of privatised enterprises. The results suggest that Hungary has preferred privatisation by direct sales by a considerable margin, but has recently shifted towards share issues. Both types of sale have predominantly been gradual. Subsequent sales, however, confirm the government's intention to sell previously retained shares. An analysis of IPOs during 1990–1998 shows positive initial returns on Privatisation Initial Public Offers (PIPOs) and greater underpricing than for other IPOs. The long term returns of PIPOs are positive and they outperform other IPOs in all periods after the listing.