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Enterprise Investment During the Transition: Evidence from Czech Panel Data

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Author Info
Lizal, Lubomir
Svejnar, Jan

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Abstract

We analyse investment behaviour of the population of medium and large industrial firms located in the Czech Republic in 1992–5. We examine the relevance of alternative models of investment and test if investment behaviour varies across ownership-legal form categories of firms. By using a large panel of quarterly observations, we eliminate biases introduced by data aggregation and selectivity, reduce measurement error, take into account heterogeneity across firms and over time, and control for the significant seasonal variation in investment. The data indicate that foreign-owned companies invest the most and cooperatives the least. Contrary to earlier survey findings, our large data set does not support the hypothesis that private firms invest more than state-owned ones. Our econometric tests suggest that, except for cooperatives and smaller private firms, the behaviour of firms is better approximated by the neoclassical/accelerator model than cash flow or financing constraint theories. The data also fit quite precisely a dynamic structural model of investment for a profit-maximizing firm.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1835.

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Date of creation: Mar 1998
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Handle: RePEc:cpr:ceprdp:1835

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Related research
Keywords: Czech Republic; Firms; Investment; Ownership; Transition;

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Find related papers by JEL classification:
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
G3 - Financial Economics - - Corporate Finance and Governance
P5 - Economic Systems - - Comparative Economic Systems

Cited by:
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  1. Richard B. Goud Jr., 2002. "Ownership and Firm Performance: Evidence from 25 Countries in Central and Eastern Europe and the Former Soviet Union," Development and Comp Systems 0207002, EconWPA. [Downloadable!]
  2. Lubomir Lizal & Jan Svejnar, 2000. "Financial Conditions and Investment during the Transition: Evidence from Czech Firms," CERGE-EI Working Papers wp153, The Center for Economic Research and Graduate Education - Economic Institute, Prague. [Downloadable!]
    Other versions:
  3. Lubomir Lizal, 2001. "Does a Soft Macroeconomic Environment Induce Restructuring on the Microeconomic Level during the Transition Period? Evidence from Investment Behavior of Czech Enterprises," Development and Comp Systems 0012010, EconWPA. [Downloadable!]
    Other versions:
  4. Valentijn Bilsen & Elena Mitina, 1999. "Financing Firm Start-up and Restructuring in Transition Countries: Evidence from Belarus, the Ukraine and Russia," ESRC Centre for Business Research - Working Papers wp150, ESRC Centre for Business Research. [Downloadable!]
  5. Prasnikar, Janez & Svejnar, Jan, 2003. "Investment, Wages and Ownership During the Transition to a Market Economy: Evidence from Slovenian Firms," CEPR Discussion Papers 4144, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Alan Bevan & Saul Estrin & Mark E. Schaffer, 1999. "Determinants of Enterprise Performance during Transition," CERT Discussion Papers 9903, Centre for Economic Reform and Transformation, Heriot Watt University. [Downloadable!]
  7. Natalya Volchkova, 2001. "Does Financial-Industrial Group Membership Affect Fixed Investment: Evidence from Russia," Working Papers w0009, Center for Economic and Financial Research (CEFIR). [Downloadable!]
    Other versions:
  8. Lawrence Peter King, 1999. "The Developmental Consequences of Foreign Direct Investment in the Transition from Socialism to Capitalism: The Performance of Foreign Owned Firms in Hungary," William Davidson Institute Working Papers Series 277, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  9. Lubomir Lizal & Jan Svejnar, 2001. "Investment, Credit Rationing and the Soft Budget Constraint: Evidence from Czech Panel Data," William Davidson Institute Working Papers Series 363, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  10. Debora Revoltella, 2001. "Financing Enterprises in the Czech Republic: Debt and Firm-specific Variables," Economic Change and Restructuring, Springer, vol. 34(3), pages 231-246, October. [Downloadable!] (restricted)
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