Can restructuring gains be sustained without ownership changes? Evidence from withdrawn privatizations

By employing a novel, hand-collected sample of withdrawn and completed share-issue privatizations (SIPs) we show that both groups undergo comparable restructuring processes over the 3 years preceding the event. We employ matching procedures to explicitly control for the identified restructuring effect, isolating the ultimate consequences of the ownership transfer from state to private investors on corporate policies and performance. We document that, absent the ownership transfer, most of the gains realized during the restructuring process are re-absorbed over the post-treatment period. The transition from state to private ownership thus represents a necessary condition for the long-term success of privatization programs.