FEEM working papers "Note di lavoro" series
2002 .063

Privatization and R&D Performance: An Empirical Analysis Based on Tobin's q

Authors: Federico Munari, Raffaele Oriani
Series: Economy and Society
Editor: Fausto Panunzi
Type: Journal
Keywords: Privatization,R&D Performance,market value,corporate restructuring
JEL n.: G34,O32
JEL: Industrial and Corporate Change
Pages: vol. 14, issue 1, pp. 61-91
Date: 2005


In this paper, we analyze the impact of privatization on the firms' R&D performance. We expect that, in the early period after privatization, path dependencies still negatively affect the efficiency of R&D operations. We test our hypothesis using a Tobin's q measure and estimating a hedonic model, already adopted by several scholars to assess the impact of innovation related assets on the firm's market value (Griliches, 1981). We estimate the regression model on an original panel data of 40 firms, including 20 firms privatized through public share offering in different countries of Western Europe over the period 1982-1997 that were matched at the country and industry level with 20 publicly held firms. Our results show that stock markets evaluate R&D investments of newly privatized companies less than R&D investments of industry-matched companies.

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