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State Ownership, Political Institutions, and Stock Price Informativeness: Evidence from Privatization

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  • Ben-Nasr, Hamdi
  • Cosset, Jean-Claude

Abstract

In this paper, we examine the relation between government ownership and stock price informativeness around the world. Using a sample of privatized firms from 41 countries between 1980 and 2012, we find strong and robust evidence that state ownership is associated with lower firm-level stock price variation, i.e., stock price informativeness. Furthermore, we find that the relation between state ownership and stock price informativeness depends on political institutions. In particular, the adverse effects of state ownership on stock price informativeness are more pronounced in countries with lower political rights (i.e., lower political constraints on the government).

Suggested Citation

  • Ben-Nasr, Hamdi & Cosset, Jean-Claude, 2014. "State Ownership, Political Institutions, and Stock Price Informativeness: Evidence from Privatization," Journal of Corporate Finance, Elsevier, vol. 29(C), pages 179-199.
    • Handle: RePEc:eee:corfin:v:29:y:2014:i:c:p:179-199
    DOI: 10.1016/j.jcorpfin.2014.10.004
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    More about this item

    Keywords

    Government ownership; Political institutions; Privatization; Stock price informativeness;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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