Privatization On The Capital Market Essay

Introduction
Before the start of the second world war the private sector was the dominant producer of public goods and services throughout Europe. However, as vast parts of the Western world were destroyed, most of the production had to be transferred to public governments.
However, in 1960s Adenauer, the incumbent Bundeskanzler of former Germany, started to denationalize state-owned-enterprises (SOE) in major industries. Also Great Britain initiated privatization programs under the Thatcher government in the 1980s and 1990s. Notwithstanding Thatcher pointed out that governments should retain control of some industries like the telecommunication, postal, electricity and gas sectors as they provide essential goods and services for the people and are not exposed to monopolistic structures when controlled by governments.
Due to the success of the British privatization program many other European countries started to denationalize resulting to an enormous privatization wave in the following years.
Since the early 1980s governments around the world privatized SOEs, raising over $700bn by issuing shares on capital markets, called share-issue privatization (SIP). Undoubtedly, these SIPs have had major impacts on the capital markets. According to Boutchkova and Megginson

Then, the data and methodology for the income statement analysis is described in Section III. Section IV thoroughly examines the income statements analysis which is used for testing outperformance for European SIPs. Section V provides an in-depth analysis concerning the performance of SIPs in financial markets. Possible implications of our results round off our empirical analysis. Ultimately, a conclusion is provided entailing a future perspective and further research fields regarding