The short- and long-term performance of privatization initial public offerings in Europe

This article investigates the return behavior of privatization initial public offerings (PIPOs) in Europe over both the short- and long-run horizons. Using data from a sample of 162 PIPOs over the period 1986-2008, we show that European PIPOs outperform, in terms of risk-adjusted abnormal returns, a benchmark market index and a portfolio composed of 162 European private IPOs, regardless of the horizon of analysis. Our results are im- portant for both investors and policymakers with respect to their investment and privatization decisions, and also allow a better understanding of the financial performance behavior of the privatized state-owned enterprises.