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Are oligarchs productive? Theory and evidence

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  • Gorodnichenko, Yuriy
  • Grygorenko, Yegor

Abstract

This paper develops a partial equilibrium model to account for stylized facts about the behavior of oligarchs, politically and economically strong conglomerates, in transition and developing countries. The model predicts that oligarchs are more likely than other owners to invest in productivity enhancing projects and to vertically integrate firms to capture the gains from possible synergies and, thus, oligarchs can be productive. Using a unique data set comprising almost 2000 Ukrainian open joint stock companies, the paper tests empirical implications of the model. In contrast to commonly held views, econometric results suggest that, after controlling for endogeneity of ownership, oligarchs can improve the performance of the firms they own relative to other firms. Journal of Comparative Economics 36 (1) (2008) 17-42.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 36 (2008)
Issue (Month): 1 (March)
Pages: 17-42

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Handle: RePEc:eee:jcecon:v:36:y:2008:i:1:p:17-42

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Web page: http://www.elsevier.com/locate/inca/622864

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Cited by:
  1. Gorodnichenko, Yuriy & Schnitzer, Monika, 2010. "Financial constraints and innovation: Why poor countries don't catchup," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 341, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  2. Jürgen Wandel, 2011. "Business groups and competition in post-Soviet transition economies: The case of Russian “agroholdings”," The Review of Austrian Economics, Springer, Springer, vol. 24(4), pages 403-450, December.
  3. Sprenger, Carsten, 2011. "The choice of ownership structure: Evidence from Russian mass privatization," Journal of Comparative Economics, Elsevier, Elsevier, vol. 39(2), pages 260-277, June.
  4. Muzaffarjon Ahunov & Leo Van Hove & Marc Jegers, 2013. "Selection and hidden bias in cross-border bank acquisitions: Ukraine’s takeover wave," Working Papers, European Bank for Reconstruction and Development, Office of the Chief Economist 162, European Bank for Reconstruction and Development, Office of the Chief Economist.
  5. Benjamin Maury & Eva Liljeblom, 2009. "Oligarchs, political regime changes, and firm valuation," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 17(3), pages 411-438, 07.
  6. Iwasaki, Ichiro, 2014. "Global financial crisis, corporate governance, and firm survival:," Journal of Comparative Economics, Elsevier, Elsevier, vol. 42(1), pages 178-211.
  7. Estrin, Saul & Hanousek, Jan & Svejnar, Jan, 2009. "Effects of Privatization and Ownership in Transition Economies," Policy Research Working Paper Series, The World Bank 4811, The World Bank.
  8. Saul Estrin & Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2009. "The Effects of Privatization and Ownership in Transition Economies," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 47(3), pages 699-728, September.
  9. Salla Pöyry & Benjamin Maury, 2010. "Influential ownership and capital structure," Managerial and Decision Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 31(5), pages 311-324.
  10. Guriev, Sergei & Rachinsky, Andrei, 2006. "The Evolution of Personal Wealth in the Former Soviet Union and Central and Eastern Europe," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2006/120, World Institute for Development Economic Research (UNU-WIDER).

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