{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,2,21]],"date-time":"2025-02-21T22:51:10Z","timestamp":1740178270839,"version":"3.37.3"},"reference-count":51,"publisher":"Virtus Interpress","issue":"2","license":[{"start":{"date-parts":[[2021,4,27]],"date-time":"2021-04-27T00:00:00Z","timestamp":1619481600000},"content-version":"vor","delay-in-days":116,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0"},{"start":{"date-parts":[[2021,4,27]],"date-time":"2021-04-27T00:00:00Z","timestamp":1619481600000},"content-version":"tdm","delay-in-days":116,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0"}],"funder":[{"DOI":"10.13039\/501100001871","name":"Funda\u00e7\u00e3o para a Ci\u00eancia e a Tecnologia","doi-asserted-by":"publisher","award":["UIDB\/04521\/2020"],"award-info":[{"award-number":["UIDB\/04521\/2020"]}],"id":[{"id":"10.13039\/501100001871","id-type":"DOI","asserted-by":"publisher"}]}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["JGR"],"published-print":{"date-parts":[[2021]]},"abstract":"<jats:p>Over the past decades, there has been a trend towards privatisation in Europe. However, surprisingly little has been published in the finance literature on the industry effects of privatisation on non-financial firms\u2019 capital structure. Talberg, Winge, Frydenberg, and Westgaard (2008) demonstrate that capital structures are industry-specific, and the literature on privatisation and leverage claims both a positive and a negative effect. Using a large sample of privatised firms in Europe, this paper analyses the impact of privatisation on firms\u2019 capital structure. Our results provide no evidence that privatisation impacts firms\u2019 capital structure. Instead, the level of leverage remains largely the same a few years after privatisation. These results remain unchanged even after controlling for certain characteristics, such as the type (asset sale or share issue) of privatisation and the percentage of privatisation. However, additional tests reveal that industry specificities are relevant in explaining capital structure variations following privatisation. When considering industry-specific characteristics, we found substantial statistical evidence that firms in capital-intensive industries experience a greater leverage level after being privatised. Our findings also suggest that governments may optimise privatisation processes after considering what capital-intensive firms may require in terms of funding long-term assets.<\/jats:p>","DOI":"10.22495\/jgrv10i2art14","type":"journal-article","created":{"date-parts":[[2021,4,27]],"date-time":"2021-04-27T11:49:02Z","timestamp":1619524142000},"page":"166-178","source":"Crossref","is-referenced-by-count":0,"title":["Does privatisation affect industries and firms\u2019 capital structure in Europe?"],"prefix":"10.22495","volume":"10","author":[{"ORCID":"https:\/\/orcid.org\/0000-0003-4177-5673","authenticated-orcid":false,"given":"Victor","family":"Barros","sequence":"first","affiliation":[{"name":"University of Lisbon"}]},{"given":"D\u00e9cio","family":"Chilumbo","sequence":"additional","affiliation":[{"name":"University of Lisbon"}]},{"ORCID":"https:\/\/orcid.org\/0000-0002-1235-5779","authenticated-orcid":false,"given":"Joaquim Miranda","family":"Sarmento","sequence":"additional","affiliation":[{"name":"University of Lisbon"}]}],"member":"9787","published-online":{"date-parts":[[2021,4,27]]},"reference":[{"key":"ref0","doi-asserted-by":"publisher","unstructured":"Adhari, R., & Viverita, V. (2015). Capital structure, ownership concentration and firm performance: Evidence of reverse causality hypothesis in ASEAN countries. Corporate Ownership & Control, 12(4\u20134), 451\u2013461. https:\/\/doi.org\/10.22495\/cocv12i4c4p3","DOI":"10.22495\/cocv12i4c4p3"},{"key":"ref1","doi-asserted-by":"publisher","unstructured":"Arcas, M. J., & Bachiller, P. (2008). Performance and capital structure of privatized firms in Europe. Global Economic Review, 37(1), 107\u2013123. https:\/\/doi.org\/10.1080\/12265080801911980","DOI":"10.1080\/12265080801911980"},{"key":"ref2","doi-asserted-by":"publisher","unstructured":"Arsov, S., & Naumoski, A. (2016). Determinants of capital structure: An empirical study of companies from selected post-transition economies. Zbornik Radova Ekonomskog Fakulteta u Rijeci: \u010casopis za Ekonomsku Teoriju i Praksu\/Proceedings of Rijeka Faculty of Economics: Journal of Economics and Business, 34(1), 119\u2013146. https:\/\/doi.org\/10.18045\/zbefri.2016.1.119","DOI":"10.18045\/zbefri.2016.1.119"},{"key":"ref3","doi-asserted-by":"publisher","unstructured":"Barbosa, C., Costa, C. M., & Funchal, B. (2012). The effects of privatization on the capital structure of Brazilian firms. Applied Economics Letters, 19(12), 1189\u20131192. https:\/\/doi.org\/10.1080\/13504851.2011.617687","DOI":"10.1080\/13504851.2011.617687"},{"key":"ref4","doi-asserted-by":"publisher","unstructured":"Berger, A. N., & di Patti, E. B. (2006). Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry. Journal of Banking and Finance, 30(4), 1065\u20131102. https:\/\/doi.org\/10.1016\/j.jbankfin.2005.05.015","DOI":"10.1016\/j.jbankfin.2005.05.015"},{"key":"ref5","doi-asserted-by":"publisher","unstructured":"Berger, P. G., Ofek, E., & Yermack, D. L. (1997). Managerial entrenchment and capital structure decisions. The Journal of Finance, 52(4), 1411\u20131438. https:\/\/doi.org\/10.1111\/j.1540-6261.1997.tb01115.x","DOI":"10.1111\/j.1540-6261.1997.tb01115.x"},{"key":"ref6","unstructured":"Berman, J., & Pfleeger, J. (1997). Which industries are sensitive to business cycles? Monthly Labor Review, 120(2), 19\u201325. Retrieved from https:\/\/www.bls.gov\/mlr\/1997\/02\/art2full.pdf"},{"key":"ref7","doi-asserted-by":"publisher","unstructured":"Borisova, G., & Megginson, W. L. (2011). Does government ownership affect the cost of debt? Evidence from privatization. The Review of Financial Studies, 24(8), 2693\u20132737. https:\/\/doi.org\/10.1093\/rfs\/hhq154","DOI":"10.1093\/rfs\/hhq154"},{"key":"ref8","doi-asserted-by":"publisher","unstructured":"Boubakri, N., & Cosset, J.-C. (1998). The financial and operating performance of newly privatized firms: Evidence from developing countries. The Journal of Finance, 53(3), 1081\u20131110. https:\/\/doi.org\/10.1111\/0022-1082.00044","DOI":"10.1111\/0022-1082.00044"},{"key":"ref9","doi-asserted-by":"publisher","unstructured":"Bradley, M., Jarrell, G. A., & Kim, E. H. (1984). On the existence of an optimal capital structure: Theory and evidence. The Journal of Finance, 39(3), 857\u2013878. https:\/\/doi.org\/10.1111\/j.1540-6261.1984.tb03680.x","DOI":"10.1111\/j.1540-6261.1984.tb03680.x"},{"key":"ref10","doi-asserted-by":"publisher","unstructured":"Cecchi, M. (2017). Financial structure in Italian business groups. Corporate Ownership & Control, 14(4\u20132), 362\u2013379. https:\/\/doi.org\/10.22495\/cocv14i4c2art3","DOI":"10.22495\/cocv14i4c2art3"},{"key":"ref11","doi-asserted-by":"publisher","unstructured":"Chahyadi, C. S. (2008). What do we know about capital structure of privatized firms? A study of evolution and determinants of capital structure of privatized firms (PhD dissertation, University of Oklahoma). https:\/\/doi.org\/10.2139\/ssrn.1089993","DOI":"10.2139\/ssrn.1089993"},{"key":"ref12","doi-asserted-by":"publisher","unstructured":"Chang, S.-C., & Boontham, W. (2017). Post-privatization speed of state ownership relinquishment: Determinants and influence on firm performance. The North American Journal of Economics and Finance, 41, 82\u201396. https:\/\/doi.org\/10.1016\/j.najef.2017.04.001","DOI":"10.1016\/j.najef.2017.04.001"},{"key":"ref13","doi-asserted-by":"publisher","unstructured":"D\u2019Souza, J., & Megginson, W. L. (1999). The financial and operating performance of privatized firms during the 1990s. The Journal of Finance, 54(4), 1397\u20131438. https:\/\/doi.org\/10.1111\/0022-1082.00150","DOI":"10.1111\/0022-1082.00150"},{"key":"ref14","doi-asserted-by":"publisher","unstructured":"D\u2019Souza, J., Megginson, W. L., & Nash, R. (2005). Effect of institutional and firm-specific characteristics on post-privatization performance: Evidence from developed countries. Journal of Corporate Finance, 11(5), 747\u2013766. https:\/\/doi.org\/10.1016\/j.jcorpfin.2004.12.001","DOI":"10.1016\/j.jcorpfin.2004.12.001"},{"key":"ref15","doi-asserted-by":"publisher","unstructured":"De Jong, A., Verbeek, M., & Verwijmeren, P. (2011). Firms\u2019 debt-equity decisions when the static tradeoff theory and the pecking order theory disagree. Journal of Banking and Finance, 35(5), 1303\u20131314. https:\/\/doi.org\/10.1016\/j.jbankfin.2010.10.006","DOI":"10.1016\/j.jbankfin.2010.10.006"},{"key":"ref16","doi-asserted-by":"publisher","unstructured":"Degryse, H., de Goeij, P., & Kappert, P. (2012). The impact of firm and industry characteristics on small firms\u2019 capital structure. Small Business Economics, 38(4), 431\u2013447. https:\/\/doi.org\/10.1007\/s11187-010-9281-8","DOI":"10.1007\/s11187-010-9281-8"},{"key":"ref17","doi-asserted-by":"publisher","unstructured":"Eaton, J. W. (1989). Bureaucratic, capitalist and populist privatization strategies. International Review of Administrative Sciences, 55(3), 467\u2013492. https:\/\/doi.org\/10.1177\/002085238905500307","DOI":"10.1177\/002085238905500307"},{"key":"ref18","doi-asserted-by":"publisher","unstructured":"Errunza, V. R., & Mazumdar, S. C. (2001). Privatization: A theoretical framework. Journal of International Financial Markets, Institutions and Money, 11(3\u20134), 339\u2013362. https:\/\/doi.org\/10.1016\/S1042-4431(01)00038-5","DOI":"10.1016\/s1042-4431(01)00038-5"},{"key":"ref19","doi-asserted-by":"publisher","unstructured":"Faulkender, M., & Petersen, M. A. (2006). Does the source of capital affect capital structure? The Review of Financial Studies, 19(1), 45\u201379. https:\/\/doi.org\/10.1093\/rfs\/hhj003","DOI":"10.1093\/rfs\/hhj003"},{"key":"ref20","doi-asserted-by":"publisher","unstructured":"Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: Which factors are reliably important? Financial Management, 38(1), 1\u201337. https:\/\/doi.org\/10.1111\/j.1755-053X.2009.01026.x","DOI":"10.1111\/j.1755-053x.2009.01026.x"},{"key":"ref21","doi-asserted-by":"publisher","unstructured":"Gupta, N. (2005). Partial privatization and firm performance. The Journal of Finance, 60(2), 987\u20131015. https:\/\/doi.org\/10.1111\/j.1540-6261.2005.00753.x","DOI":"10.1111\/j.1540-6261.2005.00753.x"},{"key":"ref22","doi-asserted-by":"publisher","unstructured":"Hall, G., Hutchinson, P., & Michaelas, N. (2000). Industry effects on the determinants of unquoted SMEs\u2019 capital structure. International Journal of the Economics of Business, 7(3), 297\u2013312. https:\/\/doi.org\/10.1080\/13571510050197203","DOI":"10.1080\/13571510050197203"},{"key":"ref23","doi-asserted-by":"publisher","unstructured":"Harper, J. T. (2002). The performance of privatized firms in the Czech Republic. Journal of Banking and Finance, 26(4), 621\u2013649. https:\/\/doi.org\/10.1016\/S0378-4266(01)00157-1","DOI":"10.1016\/s0378-4266(01)00157-1"},{"key":"ref24","doi-asserted-by":"publisher","unstructured":"Harris, M., & Raviv, A. (1991). The theory of capital structure. The Journal of Finance, 46(1), 297\u2013355. https:\/\/doi.org\/10.1111\/j.1540-6261.1991.tb03753.x","DOI":"10.1111\/j.1540-6261.1991.tb03753.x"},{"key":"ref25","doi-asserted-by":"publisher","unstructured":"Hovakimian, A., Hovakimian, G., & Tehranian, H. (2004). Determinants of target capital structure: The case of dual debt and equity issues. Journal of Financial Economics, 71(3), 517\u2013540. https:\/\/doi.org\/10.1016\/S0304-405X(03)00181-8","DOI":"10.1016\/s0304-405x(03)00181-8"},{"key":"ref26","doi-asserted-by":"publisher","unstructured":"Hundal, S., & Eskola, A. (2020). Board of directors, capital structure, investment decisions and firm-performance: An empirical study of Nordic firms [Special issue]. Corporate Ownership & Control, 17(4), 377\u2013390. https:\/\/doi.org\/10.22495\/cocv17i4siart14","DOI":"10.22495\/cocv17i4siart14"},{"key":"ref27","doi-asserted-by":"publisher","unstructured":"Hussein, A. (2020). The influence of capital structure on company performance: Evidence from Egypt. Corporate Ownership & Control, 18(1), 8\u201321. https:\/\/doi.org\/10.22495\/cocv18i1art1","DOI":"10.22495\/cocv18i1art1"},{"key":"ref28","doi-asserted-by":"publisher","unstructured":"Jord\u00e0, \u00d2., Schularick, M., & Taylor, A. M. (2013). When credit bites back. Journal of Money, Credit and Banking, 45(s2), 3\u201328. https:\/\/doi.org\/10.1111\/jmcb.12069","DOI":"10.1111\/jmcb.12069"},{"key":"ref29","doi-asserted-by":"publisher","unstructured":"Kabir, M. H. (2013). Privatization of public enterprises in Swaziland. Corporate Ownership & Control, 10(2), 28\u201339. https:\/\/doi.org\/10.22495\/cocv10i2art3","DOI":"10.22495\/cocv10i2art3"},{"key":"ref30","doi-asserted-by":"publisher","unstructured":"MacKay, P., & Phillips, G. M. (2005). How does industry affect firm financial structure? The Review of Financial Studies, 18(4), 1433\u20131466. https:\/\/doi.org\/10.1093\/rfs\/hhi032","DOI":"10.1093\/rfs\/hhi032"},{"key":"ref31","doi-asserted-by":"publisher","unstructured":"Megginson, W. L., Nash, R. C., Netter, J. M., & Poulsen, A. B. (2004). The choice of private versus public capital markets: Evidence from privatizations. The Journal of Finance, 59(6), 2835\u20132870. https:\/\/doi.org\/10.1111\/j.1540-6261.2004.00718.x","DOI":"10.1111\/j.1540-6261.2004.00718.x"},{"key":"ref32","unstructured":"Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261\u2013297. Retrieved from https:\/\/www.jstor.org\/stable\/1809766?seq=1"},{"key":"ref33","unstructured":"Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: A correction. The American Economic Review, 53(3), 433\u2013443. Retrieved from https:\/\/www.jstor.org\/stable\/1809167?seq=1"},{"key":"ref34","doi-asserted-by":"publisher","unstructured":"Morresi, O., & Nobili, A. O. (2015). New evidence on the performance of Italian privatized firms: Should the experiment be repeated in the aftermath of the recent financial crisis? Corporate Ownership & Control, 12(3), 94\u2013113. https:\/\/doi.org\/10.22495\/cocv12i3p9","DOI":"10.22495\/cocv12i3p9"},{"key":"ref35","doi-asserted-by":"crossref","unstructured":"Myers, S. C. (1984). The capital structure puzzle. The Journal of Finance, 39(3), 575\u2013592. https:\/\/doi.org\/10.1111\/j.1540-6261.1984.tb03646.x","DOI":"10.1111\/j.1540-6261.1984.tb03646.x"},{"key":"ref36","doi-asserted-by":"crossref","unstructured":"Myers, S. C. (2001). Capital structure. Journal of Economic Perspectives, 15(2), 81\u2013102. https:\/\/doi.org\/10.1257\/jep.15.2.81","DOI":"10.1257\/jep.15.2.81"},{"key":"ref37","doi-asserted-by":"publisher","unstructured":"Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information the investors do not have. Journal of Financial Economics, 13(2), 187\u2013221. https:\/\/doi.org\/10.1016\/0304-405X(84)90023-0","DOI":"10.1016\/0304-405x(84)90023-0"},{"key":"ref38","doi-asserted-by":"publisher","unstructured":"Ntoung Agbor Tabot, L., Cecilio, H. G., & Puime Guill\u00e9n, F. (2016). Capital structure determinants: Evidence from Spanish listed firms. Corporate Ownership & Control, 13(4\u20133), 506\u2013519. https:\/\/doi.org\/10.22495\/cocv13i4c3p9","DOI":"10.22495\/cocv13i4c3p9"},{"key":"ref39","doi-asserted-by":"publisher","unstructured":"Opler, T. C., & Titman, S. (1994). Financial distress and corporate performance. The Journal of Finance, 49(3), 1015\u20131040. https:\/\/doi.org\/10.1111\/j.1540-6261.1994.tb00086.x","DOI":"10.1111\/j.1540-6261.1994.tb00086.x"},{"key":"ref40","doi-asserted-by":"publisher","unstructured":"Otieno, O. L., & Ngwenya, S. (2015). The relationship between capital structure and financial performance of firms listed on the Nairobi securities exchange. Corporate Ownership & Control, 13(1\u20132), 296\u2013314. https:\/\/doi.org\/10.22495\/cocv13i1c2p8","DOI":"10.22495\/cocv13i1c2p8"},{"key":"ref41","doi-asserted-by":"publisher","unstructured":"Patena, W., & B\u0142aszczyk, B. (2016). Post-privatization corporate performance: Evidence from companies privatized in Poland in 2008\u20132011. Studia Ekonomiczne, 2(89), 199\u2013221. Retrieved from http:\/\/bazekon.icm.edu.pl\/bazekon\/element\/bwmeta1.element.ekon-element-000171437274","DOI":"10.2139\/ssrn.2693541"},{"key":"ref42","doi-asserted-by":"publisher","unstructured":"Rampini, A. A., & Viswanathan, S. (2013). Collateral and capital structure. Journal of Financial Economics, 109(2), 466\u2013492. https:\/\/doi.org\/10.1016\/j.jfineco.2013.03.002","DOI":"10.1016\/j.jfineco.2013.03.002"},{"key":"ref43","unstructured":"Savas, E. S. (2000). Privatization and public-private partnerships (2nd ed.). New York, NY: CQ Press."},{"key":"ref44","doi-asserted-by":"publisher","unstructured":"Sheshinski, E., & L\u00f3pez-Calva, L. F. (2003). Privatization and its benefits: Theory and evidence. CESifo Economic Studies, 49(3), 429\u2013459. https:\/\/doi.org\/10.1093\/cesifo\/49.3.429","DOI":"10.1093\/cesifo\/49.3.429"},{"key":"ref45","doi-asserted-by":"publisher","unstructured":"Shyam-Sunder, L., & Myers, S. C. (1999). Testing static tradeoff against pecking order models of capital structure. Journal of Financial Economics, 51(2), 219\u2013244. https:\/\/doi.org\/10.1016\/S0304-405X(98)00051-8","DOI":"10.3386\/w4722"},{"key":"ref46","doi-asserted-by":"publisher","unstructured":"Talberg, M., Winge, C., Frydenberg, S., & Westgaard, S. (2008). Capital structure across industries. International Journal of the Economics of Business, 15(2), 181\u2013200. https:\/\/doi.org\/10.1080\/13571510802134304","DOI":"10.1080\/13571510802134304"},{"key":"ref47","doi-asserted-by":"publisher","unstructured":"Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. The Journal of Finance, 43(1), 1\u201319. https:\/\/doi.org\/10.1111\/j.1540-6261.1988.tb02585.x","DOI":"10.1111\/j.1540-6261.1988.tb02585.x"},{"key":"ref48","doi-asserted-by":"publisher","unstructured":"Vaz Ferreira, J. M. B. (2012). The performance of newly privatized firms: The case of Portugal. Journal of Governance and Regulation, 1(2), 92\u2013125. https:\/\/doi.org\/10.22495\/jgr_v1_i2_p6","DOI":"10.22495\/jgr_v1_i2_p6"},{"key":"ref49","doi-asserted-by":"publisher","unstructured":"Vicencio, E. R. (2016). Monetary conformation of the corporate governmentality II: The monetary system and the privatization process. Journal of Governance and Regulation, 5(2), 71\u201386. https:\/\/doi.org\/10.22495\/jgr_v5_i2_p8","DOI":"10.22495\/jgr_v5_i2_p8"},{"key":"ref50","doi-asserted-by":"crossref","unstructured":"Vickers, J., & Yarrow, C. (1988) Privatization: An economics analysis. Cambridge, MA: MIT Press.","DOI":"10.1007\/978-94-011-7429-9_5"}],"container-title":["Journal of Governance and Regulation"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/virtusinterpress.org\/IMG\/pdf\/jgrv10i2art14.pdf","content-type":"application\/pdf","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/virtusinterpress.org\/IMG\/pdf\/jgrv10i2art14.pdf","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2022,12,25]],"date-time":"2022-12-25T14:59:58Z","timestamp":1671980398000},"score":1,"resource":{"primary":{"URL":"https:\/\/virtusinterpress.org\/Does-privatisation-affect-industries-and-firms-capital-structure-in-Europe.html"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2021]]},"references-count":51,"journal-issue":{"issue":"2","published-online":{"date-parts":[[2021]]},"published-print":{"date-parts":[[2021]]}},"URL":"https:\/\/doi.org\/10.22495\/jgrv10i2art14","archive":["Portico","Portico"],"relation":{},"ISSN":["2306-6784","2220-9352"],"issn-type":[{"type":"electronic","value":"2306-6784"},{"type":"print","value":"2220-9352"}],"subject":[],"published":{"date-parts":[[2021]]}}}