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I
Between 13 September 1974 and 29 July 1976, the Portuguese Republic nationalised 253 companies, of which 60 were listed on the Lisbon Stock Exchange. This wave of nationalisations took the weight of the state in the Portuguese economy to levels formerly unseen. Shareholders of the nationalised companies were paid indemnities, which were specified between 1974 and 1979 but settled much later (up to 11 years in some cases). The Portuguese nationalisations of the 1970s are generally regarded as having had strong expropriatory characteristics, although estimates of the wealth transfer triggered by the nationalisations and subsequent compensation are lacking in the literature available. In this article, we compute a set of counterfactually estimated values of the nationalised shares had nationalisations not occurred. The results show that, contrary to common belief, the compensation paid to small shareholders was in fact fair, if not generous. In stark contrast, large shareholders, essentially a handful of families who controlled the biggest Portuguese companies in the late 1970s, were deliberately hurt by the way in which the compensation packages were put together by the post-25 April revolution governments. The structure of the article is as follows. Section II provides a description of the political economy of the Estado Novo regime that prevailed in Portugal from 1926 to 1974. Sections III and IV analyse the nationalisation process and discuss its drivers. Sections V, VI and VII describe data and the sample, compute nationalisation premia, and estimate the magnitude of wealth transfers. Section VIII concludes.
II
From 1932 to 1974, the Portuguese political regime was the Estado Novo (literally, 'New State'), a right-wing dictatorship and the intellectual creation of António de Oliveira Salazar, prime minister until 1968. After a military coup which followed a rather chaotic period of 44 governments since the establishment of the Republic in 1910, Salazar, a public finance professor at Coimbra University and finance minister since 1928, successfully reorganised Portugal's then severely debt-ridden finances.2 After World War II, the Portuguese economy entered a path of fast convergence, which brought income per capita closer to the rest of Western Europe than ever before in the twentieth century. The period from 1950 to 1973 is in fact regarded as the 'golden years'...