This paper employs a multinomial logit model to examine what determines the choice of a particular firm for a given privatisation method. A variety of hypotheses about possible determinants of ownership change are tested using an extensive data set for Polish manufacturing at the beginning of transition. The results at a firm as well as at a sector level give strong support to the hypothesis of the importance of resource constraints on the choice of ownership. Large firms with high financing requirement are more likely to be owned by outsiders. High sectoral capital intensity discourages small insider owned firms while high degree of product differentiation is a constraint for different investors, with the exception of outsiders. We also find that firm quality, measured by profitability and exporting outside the Soviet block, appeals to all types of investors but, additionally, privatisation offers outsiders ways of entering sectors with substantial entry barriers.
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Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number
04/9.
Length: Date of creation: Mar 2004 Date of revision: Handle: RePEc:lec:leecon:04/9
Contact details of provider: Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK Phone: +44 (0)116 252 2887 Fax: +44 (0)116 252 2908 Email: Web page: http://www.le.ac.uk/economics/
Find related papers by JEL classification: P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
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