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Seminar IECON: "Take the money and run? The consequences of controversial privatizations"

Seminar IECON
Felipe González (PUC)
"Take the money and run? The consequences of controversial privatizations"

Abstract.
Privatization reforms are plagued by controversies regarding sale prices and the identity of buyers.  However, little is known about the subsequent behavior of firms privatized in controversial processes. This paper studies the rent-seeking behavior of firms privatized by the Pinochet regime in Chile. Using several novel datasets, we characterize privatizations using a data-driven algorithm, confirming that some state-owned firms were sold underpriced to politically connected individuals, i.e. were controversial. We then compare the rent-seeking behavior of similar firms that were privatized differently and find that firms with controversial privatizations benefitted from the Pinochet regime after being sold, changed their ownership structures, formed strategic political connections, and financed political campaigns. These results suggest that after a controversial privatization firms engage in rent-seeking and, therefore, these episodes are more than just a transfer of wealth.

Friday 27/4/2018
12 hs, salón Multifuncional
Facultad de Ciencias Económicas y de Administración
 
IECON
CCECO
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