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

52 Pages Posted: 7 Jan 2014 Last revised: 8 Jan 2014

See all articles by Hamdi Ben‐Nasr

Hamdi Ben‐Nasr

King Saud University - College of Business Administration

Jean-Claude Cosset

HEC Montreal

Date Written: January 7, 2014

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 1983 and 2007, 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).

Keywords: Government Ownership; Political institutions; Privatization; Stock Price Informativeness

JEL Classification: G32, G38, G30, G14, G15

Suggested Citation

Ben-Nasr, Hamdi and Cosset, Jean-Claude, State Ownership, Political Institutions, and Stock Price Informativeness: Evidence from Privatization (January 7, 2014). Available at SSRN: https://ssrn.com/abstract=2375574 or http://dx.doi.org/10.2139/ssrn.2375574

Hamdi Ben-Nasr (Contact Author)

King Saud University - College of Business Administration ( email )

B.P. 2459
Riyad, 11451
Saudi Arabia

Jean-Claude Cosset

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-6872 (Phone)
514-340-6987 (Fax)

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