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Ownership and Productive Efficiency: Evidence from Estonia

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  • Derek C. Jones
  • Niels Mygind

Abstract

Privatization in Estonia has produced varied ownership configurations. This enables hypotheses on the productivity effects of different ownership forms to be tested. Findings are based on fixed effects production function models and are estimated using a large, random sample of firms. Depending on the particular specification (and relative to state ownership) we find that: i) private ownership is 13-22% more efficient; (ii) all types of private ownership are more productive, though managerial ownership has the biggest effects (21-32%) and ownership by domestic outsiders has the smallest impact (0-15%). The joint hypothesis that privatization coefficients are equal is rejected. Findings are robust with respect to choice of technology and the use of instrumental variable estimates. These results provide only partial support for the standard theory of privatization and stronger support for theorists who argue that some forms of insider ownership may constitute preferable forms of corporate goverance in some circumstances.

Suggested Citation

  • Derek C. Jones & Niels Mygind, 2001. "Ownership and Productive Efficiency: Evidence from Estonia," William Davidson Institute Working Papers Series 385, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2001-385
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    Cited by:

    1. Derek Jones & Panu Kalmi & Niels Mygind, 2005. "Choice of Ownership Structure and Firm Performance: Evidence from Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 83-107.
    2. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    3. Derek Jones & Panu Kalmi & Niels Mygind, 2005. "Choice of Ownership Structure and Firm Performance: Evidence from Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 83-107.
    4. Ghulam, Yaseen, 2021. "Institutions and firms’ technological changes and productivity growth," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    5. Ichiro Iwasaki & Satoshi Mizobata, 2020. "Ownership Concentration and Firm Performance in European Emerging Economies: A Meta-Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(1), pages 32-67, January.
    6. Zorica Kalezić, 2015. "Ownership Concentration and Firm Performance in Transition Economies: Evidence from Montenegro," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 4(3), pages 5-64.
    7. Panagiotis Staikouras, 2004. "Structural Reform Policy: Privatisation and Beyond—The Case of Greece," European Journal of Law and Economics, Springer, vol. 17(3), pages 373-398, May.
    8. Amess, Kevin & Roberts, Barbara M., 2007. "The productivity effects of privatization: The case of Polish cooperatives," International Review of Financial Analysis, Elsevier, vol. 16(4), pages 354-366.
    9. Bersant Hobdari & Aleksandra Gregoric & Evis Sinani, 2011. "The role of firm ownership on internationalization: evidence from two transition economies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(3), pages 393-413, August.
    10. Rui Zhang & Xun Zhang, 2016. "Capital Structure Premium in Multinational SOEs: Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 283-293, February.
    11. Bogart, Dan & Chaudhary, Latika, 2015. "Off the rails: Is state ownership bad for productivity?," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 997-1013.
    12. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2001. "Competition and Enterprise Performance in Transition Economies: Evidence from a Cross-country Survey," William Davidson Institute Working Papers Series 376, William Davidson Institute at the University of Michigan.
    13. Rasyad A. Parinduri & Yohanes E. Riyanto, 2014. "Bank Ownership and Efficiency in the Aftermath of Financial Crises: Evidence from Indonesia," Review of Development Economics, Wiley Blackwell, vol. 18(1), pages 93-106, February.
    14. Bersant Hobdari, 2008. "Insider Ownership and Capital Constraints: An Empirical Investigation of the Credit Rationing Hypothesis in Estonia," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(6), pages 536-549, November.
    15. Ghulam, Yaseen, 2017. "Long-run performance of an industry after broader reforms including privatization," Research in International Business and Finance, Elsevier, vol. 42(C), pages 745-768.
    16. Jorge A. Sanguinetty & Tania C. Mastrapa, 2010. "Lessons Learned from 20 Years of Privatization: Albania, Estonia and Russia," Annual Proceedings, The Association for the Study of the Cuban Economy, vol. 20.
    17. Ghulam, Yaseen & Jaffry, Shabbar, 2015. "Efficiency and productivity of the cement industry: Pakistani experience of deregulation and privatisation," Omega, Elsevier, vol. 54(C), pages 101-115.
    18. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2001. "Competition and Enterprise Performance in Transition Economies from a Cross-Country Survey," CERT Discussion Papers 0101, Centre for Economic Reform and Transformation, Heriot Watt University.
    19. Derek C. Jones & Panu Kalmi, 2009. "Trust, Inequality And The Size Of The Co‐Operative Sector: Cross‐Country Evidence," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(2), pages 165-195, June.
    20. repec:zbw:bofitp:2003_007 is not listed on IDEAS
    21. Xiaohua Wang & Zhi Luo & Tianyi Wang & Zhuo Huang, 2017. "The Impact of Privatization on TFP: a Quasi-Experiment in China," Annals of Economics and Finance, Society for AEF, vol. 18(1), pages 53-71, May.

    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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