Testing limits to policy reversal: Evidence from Indian privatizations

• 成果类型: Article
• 署名作者: Dastidar, Siddhartha G.; Fisman, Raymond; Khanna, Tarun
• 署名单位: Columbia University; Harvard University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2007.09.002
• 发表日期: 2008
• 页码: 513-526
• 关键词: Government commitment; layoffs; Emerging markets; Electoral turnover; Government policy credibility

摘要

We examine the effect of regime change on privatization. In the 2004 Indian election, the pro-reform BJP was unexpectedly defeated by a less reformist coalition. Stock prices of government-controlled companies that had been slated for privatization by the BJP dropped 3.5% relative to private firms. Government-controlled companies that were under study for possible privatization fell 7.5% relative to private firms. This is consistent with investor belief of a point of no return, where advanced reforms are more difficult to reverse. Further analysis suggests that layoffs, combined with the privatization announcement, served as a credible commitment to privatize. (C) 2008 Elsevier B.V. All rights reserved.