Factors affecting the stock price performance of share issued privatizations

Shareholders in many share issued privatizations (SIPs) have enjoyed substantial increases in the value of their investments. This study examines the factors that influence the long-run stock price performance of an international sample of SIPs, focusing on three-year buy and hold returns. After controlling for market-wide changes in stock prices, one finds that the relative size of the company has a negative effect on stock price performance, retained government ownership has a positive effect, the presence of a golden share has a negative effect, initial underpricing has a positive effect, and the timing of the privatization has no effect. Performance also depends on the industry and home country.