It is the purpose of this paper to analyze the trading activity of investors who bought and sold shares of the privatized firms immediately before and immediately after the announcement of privatization and/or around the actual day in which the selling of stocks was realized. We will use an event type study recording both price and volumes data of different classes of Italian former public firms operating in different sectors and listed in the Milan stock exchange. Event type study allow researchers to test for the existence of “anomalies” in the dynamic of the time series they observe and to attribute these anomalies to some event that took place in that moment or around (immediately before and immediately after) that moment. This permits to detect speculation activity of private investors and allows researchers to identify the distribution of gains and losses in private portfolio activity. Our analysis has been conducted with respect to the public utility sectors and it has revealed the extent of the short term gains realized by investors around the privatization periods.
73rd International Atlantic Economic Conference
March 28 - 31, 2012 | Istanbul, Turkey
Share trading of privatized companies: An event method analysis for the Italian case
Saturday, 31 March 2012: 4:45 PM
In the last twenty-five years previously nationalized public enterprises have been privatized all around the world and subjected to some form of regulation to limit the market power of the newly created dominant private firms. This is the case of the vast majority of the so-called public utilities (electricity, gas, telephone, transport, etc.), which are nowadays in the hands of (few) private subjects. In some cases the privatization process has taken the form of a direct selling of companies’ stock to private investors whereas in some other cases – generally in post-Soviet Russia and other East European countries – it was realized by means of the bonus system. In the first case public firms were already listed in stock markets and the minority quota, however large or small, traded and priced in those markets. Hence, there was a regular activity of buying and selling of stocks before governments decided to fully (or almost fully) privatize each firm.
Saturday, 31 March 2012: 4:45 PM
In the last twenty-five years previously nationalized public enterprises have been privatized all around the world and subjected to some form of regulation to limit the market power of the newly created dominant private firms. This is the case of the vast majority of the so-called public utilities (electricity, gas, telephone, transport, etc.), which are nowadays in the hands of (few) private subjects. In some cases the privatization process has taken the form of a direct selling of companies’ stock to private investors whereas in some other cases – generally in post-Soviet Russia and other East European countries – it was realized by means of the bonus system. In the first case public firms were already listed in stock markets and the minority quota, however large or small, traded and priced in those markets. Hence, there was a regular activity of buying and selling of stocks before governments decided to fully (or almost fully) privatize each firm.