The short- and long-term performance of privatization initial public offerings in Europe

Abstract

This article investigates the return behavior of privatization initial public offerings (PIPOs) in Europe over both the short- and long-run horizons. Using data from a sample of 162 PIPOs over the period 1986-2008, we show that European PIPOs outperform, in terms of risk-adjusted abnormal returns, a benchmark market index and a portfolio composed of 162 European private IPOs, regardless of the horizon of analysis. Our results are important for both investors and policymakers with respect to their investment and privatization decisions, and also allow a better understanding of the financial performance behavior of the privatized state-owned enterprises. © by author(s).