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Privatization and Governance Regulation in Frontier Emerging Markets: The Case of Romania

In: Financial Institutions and Markets

Author

Listed:
  • Gilles Chemla

    (Imperial College Business School
    University of Paris-Dauphine)

  • Adrian Pop

    (University of Nantes)

  • Diana Pop

    (University of Angers)

Abstract

This chapter investigates the link between the regulation of control transactions and the institutional and corporate features of public companies, by analyzing the massive delisting activity in the Romanian capital market. The peculiar ownership reforms involving a large number of listed companies offer a unique opportunity to verify Bebchuk and Roe’s (1999) theory of path dependence. Over time, the Romanian authorities have undertaken wide-ranging institutional reforms, most of which favor blockholders over small and dispersed shareholders. Our empirical approach, based on logit and duration models, allows us to analyze the evolution of public companies over this period and sheds light on the likely events causing frontier emerging markets’ eclipse. Our main findings reveal that delisting is more likely to occur when (i) the shareholdings acquired from the privatization authority by circumventing the capital market are high; (ii) the company experiences frequent takeover bids; and (iii) the stock liquidity is low.

Suggested Citation

  • Gilles Chemla & Adrian Pop & Diana Pop, 2010. "Privatization and Governance Regulation in Frontier Emerging Markets: The Case of Romania," Palgrave Macmillan Books, in: Robert R. Bliss & George G. Kaufman (ed.), Financial Institutions and Markets, chapter 9, pages 205-224, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-11736-5_9
    DOI: 10.1057/9780230117365_9
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    Cited by:

    1. Adrian Pop & Diana Pop, 2014. "How fair are the fair price standards in blockholder regimes?," Working Papers hal-01076722, HAL.

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