Is Privatization of Telecom Operators Socially Desirable?

This paper compares long-run buy-and-hold returns of privatization initial public offerings(IPO) to those of domestic stock markets and size matched comparable firms of respective countries using a sample of 37 privatized telecom initial public offerings from 35 countries. The evidence indicates that the privatization IPOs significantly outperform their domestic stock markets if the returns are equally-weighted while they do not outperform the markets if value-weighted. While sample firms outperform size matched firms, returns are statistically insignificant. In addition, this paper analyzes the cross-sectional determinants of long-run buy-and- hold returns of privatized telecom shares. The results indicate that the long-run performance of privatized telecom IPOs is moderately related to the proxies of policy uncertainty or systematic risk while the size of the firm and some market wide variables such as the accounting standard, origin of commercial law, and the corporate governance scheme significantly affect the stock performance of privatized telecom shares.