Effects of Share Issuing Privatization on Stock Market

Increase in operational faults and reduction of efficiency of stateowned enterprises has lead policymakers and economists to make privatization policy in order to improve their efficiency andperformance. Government applies various ways of divesting ownership and control of state-owned enterprises that Share Issuing Privatization (SIP) through stock market is the most popular one. Government follows other goals by influencing on stock market as well. This paper surveys some research, done in SIP field around the world, to investigate the effects of the SIP on stock market.Results show that using this way has caused improvement in economic climate, market development and extension of ownership culture as well as divesting the ownership. In addition, regarding volume of divestures and investors attitude towards them, we see an increase in liquidity and return of investments in market.In Iran also, privatization policy has received considerable attention after the end of the imposed war in five year development programs.Surveys of the effects of this policy on the Tehran stick market,reveals a rise in liquidity and no significant changes in the market depth.