States as LBO Specialists: Evidence from Portugal

Alpalhão, Rui M.; Pereira Alves, Paulo F.

doi:10.2139/ssrn.1734887

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States as LBO Specialists: Evidence from Portugal

International Journal of Financial Research, 2013, Forthcoming

17 Pages Posted: 5 Jan 2011 Last revised: 22 Dec 2012

See all articles by Rui M. Alpalhão

Rui M. Alpalhão

Instituto Superior das Ciencias do Trabalho e da Empresa (ISCTE) - Finance & Accounting

Paulo F. Pereira Alves

CMVM - Portuguese Securities and Exchange Commission, ISCAL and Lusofona University

Date Written: January 4, 2011

Abstract

The paper’s purpose is to quantify the performance of a State in its action as a de facto LBO specialist, taking companies private to restructure them and subsequently reselling them in the share market. A sample comprising all the listed companies nationalized in Portugal in 1975 and 1976 that were subsequently privatised through a relisting by means of a share issue is constructed. The returns earned by the Portuguese Republic are computed, comparing the market values of nationalised companies at the time of their privatization with their theoretical value in a non-nationalization scenario. A negative abnormal return for the Portuguese Republic’s investment in shares is found. This negative return is much worse than the ones computed in similar work for France.

Keywords: LBO, Nationalizations

JEL Classification: G34, G38

Suggested Citation: Suggested Citation

Alpalhão, Rui M. and Pereira Alves, Paulo F., States as LBO Specialists: Evidence from Portugal (January 4, 2011). International Journal of Financial Research, 2013, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1734887 or http://dx.doi.org/10.2139/ssrn.1734887