Breakups, privatization and firms" performance
AbstractThis paper uses new firm-level data to examine the effects of breakups of the Czech firms and their subsequent privatization on corporate performance. Unlike the existing literature, which analyzes breakups almost exclusively in advanced economies, we control for accompanying ownership changes and the fact that spinoffs and ownership are endogenous variables. We find that breakups increase the firm's profitability but do not alter its scale of operations, while the effect of privatization depends on the resulting ownership structure - sometime improving performance and sometime bringing about decline. The effects of privatization are hence less clear-cut than suggested in earlier studies. Methodologically, our study provides evidence that it is important to control for changes in ownership when analyzing divestitures and control for endogeneity, selection and data attrition when analyzing the effects of breakups and privatization.
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Bibliographic InfoArticle provided by University of Economics, Prague in its journal Politická ekonomie.
Volume (Year): 2006 (2006)
Issue (Month): 4 ()
Postal: Redakce Politické ekonomie, Vysoká škola ekonomická, nám. W. Churchilla 4, 130 67 Praha 3
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
- P47 - Economic Systems - - Other Economic Systems - - - Performance and Prospects
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