The political economy of share issue privatization: International evidence

•I test the political underpinnings of the choice of privatization method.•The political system's type, tenure and cohesion explain the privatization method.•The privatization method is politically constrained at different levels.

Using a large sample of 3266 privatization transactions from 100 countries over the period 1977–2006, I test hypotheses on the political underpinnings of the choice of privatization method. After controlling for firm-level characteristics and cross-country legal institutions, I find that the political system's type, tenure, and cohesion explain the choice between privatizing with a share issue or an asset sale. My results are robust to a series of sensitivity tests and suggest that the government's choice of privatization method is politically constrained at different levels.