Government asset sales,economic nationalism,and acquirer wealth effects |
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| Institution: | 1. Iowa State University, College of Business, Department of Finance, 3224 Gerdin Business Building, Ames, IA 50011, USA;2. Iowa State University, College of Business, Department of Finance, 3344 Gerdin Business Building, Ames, IA 50011, USA;1. University of Texas at El Paso, Economics and Finance Department, College of Business Administration, Rm. 247, El Paso, TX 79968-0543, USA;2. New Mexico State University, Finance Department, College of Business, Rm. 317, Las Cruces, NM 88003-8001, USA;1. Accounting and Finance Discipline Group, Business School, The University of Western Australia, Perth 6009 Western Australia, Australia;2. UQ Business School, The University of Queensland, Brisbane 4072 Queensland, Australia;1. Lingnan University, Hong Kong, China;2. Shanghai University of Finance and Economics, Shanghai, China;3. China Europe International Business School, Shanghai, China;4. Central University of Finance and Economics, Beijing, China |
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| Abstract: | We analyze acquirer wealth effects using a comprehensive sample of government asset sale announcements in 123 countries around the world in 1984–2009. Overall, we find positive abnormal returns to acquirers of state-owned assets. Returns are greater when the acquirer is domestic, when the sale occurs in a developing nation, and when the acquirer itself is not a former state-owned enterprise. Buyers of bailed-out firms experience average abnormal returns of 3.16%, compared to 0.70% for all other government sales. Our results suggest that the market favors acquirers that benefit from divesting governments driven by economic nationalism rather than sale revenue maximization. |
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