Privatisation in New Zealand and Australia: an empirical analysis

Abstract

Purpose

The paper aims to investigate the long‐run performance of privatised initial public offerings (IPOs) and their effects on the New Zealand share market (NZSE) and the Australian share market (ASX).

Design/methodology/approach

The paper examines the relationship between privatisation and share market capitalisation, liquidity and share ownership. The research also evaluates long‐run risk‐return performance of the privatised companies' portfolios.

Findings

The analysis reveals that privatisations have significantly increased share market capitalisation and have impacted on the market liquidity. In general, anyone investing in privatised companies' portfolios could have received significantly higher returns than investing in an aggregate market portfolio.

Originality/value

The findings have significant practical implications for individual and institutional investors.

Citation

Kerr, J., Qiu, M. and Rose, L.C. (2008), "Privatisation in New Zealand and Australia: an empirical analysis", Managerial Finance, Vol. 34 No. 1, pp. 41-52. https://doi.org/10.1108/03074350810838217