Stock Exchange, and the Wiener Börse for generously providing us with their datasets. Thanks also to Roberto

We study the change in government control of privatized firms in OECD (Organisation for Economic Co-operation and Development) countries. At the end of 2000, after the largest privatization wave in history, governments retained control of 62.4 % of privatized firms. In civil law countries, governments tend to retain large ownership positions, whereas in common law countries they typically use golden shares. When we combine these two mechanisms, we find no association between a country’s legal tradition and the extent of government control. Rather, we document more prevalent government influence over privatized firms in countries with proportional electoral rules and with a centralized system of political authority. (JEL D72, G15, H6, K22, L33) The wave of privatization that began in the United Kingdom in the 1980s, and spread across the globe during the 1990s, produced what is arguably the greatest transfer of ownership in the history of the corporation. Governments all over the world have sold, or are selling, large blocks of their ownership positions to the private sector. In terms of flows, privatization transactions, including share issue privatization (SIP) and private placements, raised US$ 1,230 billion globally during the 1977–2003 period, about one-fifth of the total value of issues floated on public equity markets. Yet stories in the popular press suggest that the rollback of state control has been incomplete. Governments Utpal Bhattacharya played an important role in the start of this project, and we gratefully acknowledge hi