Ownership, Control and Corporate Performance After Large-Scale Privatization

Jan Hanousek, Evžen Ko?enda () and Jan Svejnar
Authors registered in the RePEc Author Service: Evžen Kočenda

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: We analyze the effects of ownership type and concentration on performance of a population of firms in a model large-scale privatization economy (Czech Republic). Using specifications based on first-differences and unique instrumental variables, we find that few types of private ownership improve dynamic post-privatization performance. Concentrated foreign (but not domestic) ownership improves some measures of performance relative to state ownership. Foreign investors engage in strategic restructuring by increasing the rate of change of sales, while domestic private owners reduce the rate of change of sales and labor cost without increasing profitability. The effects of concentrated foreign ownership support the agency theory and go against theories stressing the positive effects of managerial autonomy and initiative. Our results are also consistent with the thesis that large domestic stockholders are not improving performance because they loot the firms. We find some support for the hypothesis that firms restructure by first lowering and later increasing the rate of change of employment. The state as a holder of the golden share has a positive effect on employment, while stimulating profitable restructuring. The state hence appears as a more economically and socially helping agent than in some recent studies.

Keywords: ownership; performance; privatization; corporate governance; panel data; endogeneity; industrial organization (search for similar items in EconPapers)
JEL-codes: C33 D20 G32 G34 L20 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2004-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Working Paper: Ownership, Control and Corporate Performance after Large-Scale Privatization (2004)
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