Government Control of Privatized Firms

Government Control of Privatized Firms

Bernardo Bortolotti, Mara Faccio

Series number :

Serial Number: 

Date posted :

April 01 2004

Last revised :

October 24 2018
SSRN Share


  • Privatization • 
  • Corporate governance

We study the change in government control of privatized firms in OECD countries. Results indicate that governments typically transfer ownership rights without relinquishing proportional control. Control is commonly retained by leveraging state investments through pyramids, dual-class shares, and golden shares.

Indeed, at the end of 2000, after the largest privatization wave in history, governments retain control of 62.4% of privatized firms. In civil law countries, governments tend to retain large ownership positions, whereas in common law countries they typically use golden shares. However, when we combine these two mechanisms, we find no association between a country's legal tradition and the extent of government control. Rather, we document more prevalent government influence over privatized firms in countries with proportional electoral rules and with a centralized system of political authority.

Published in

Published in: 
FEEM Working Paper No. 130.04 | EFA 2005 Moscow Meetings Paper | AFA 2006 Boston Meetings Paper | The Review of Financial Studies 22 (8), 2907-2939


Real name:
Bernardo Bortolotti
Real name:
Research Member
Purdue University - Krannert School of Management