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Mass Privatisation, Corporate Governance and Endogenous Ownership Structure

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Author Info
Irena Grosfeld ()
Iraj Hashi ()

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Abstract

We compare the change in ownership concentration in firms privatized through two different programs of mass privatization: the Czech voucher scheme and the Polish program of National Investment Funds. Despite important differences in ownership structure at the start of the process and in the quality of legal and regulatory environments, the emerging ownership patterns are remarkably similar: in the two groups of firms we observe high concentration and the emergence of industrial corporations and individuals as important dominant shareholders. Given the important evolution of ownership, we take ownership structure as endogenous and look at its determinants. We find in particular that ownership concentration depends on the degree of uncertainty in the firm's environment. In a more risky environment firms tend to have more dispersed ownership. We interpret this result in the light of the recent theories of the firm stressing the trade-off between managerial initiative and shareholder control.

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Publisher Info
Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 2003-596.

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Length: 29 pages
Date of creation: 01 Jul 2003
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Handle: RePEc:wdi:papers:2003-596

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Related research
Keywords: Corporate governance; privatization; transition; ownership structure;

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Find related papers by JEL classification:
G3 - Financial Economics - - Corporate Finance and Governance
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
P3 - Economic Systems - - Socialist Institutions and Their Transitions
P5 - Economic Systems - - Comparative Economic Systems

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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  11. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Demsetz, Harold, 1983. "The Structure of Ownership and the Theory of the Firm," Journal of Law & Economics, University of Chicago Press, vol. 26(2), pages 375-90, June.
  13. Philippe Aghion & Olivier J. Blanchard, 1998. "On privatization methods in Eastern Europe and their implications," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(1), pages 87-99, 05. [Downloadable!] (restricted)
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  17. Bianco, Magda & Casavola, Paola, 1999. "Italian corporate governance:: Effects on financial structure and firm performance," European Economic Review, Elsevier, vol. 43(4-6), pages 1057-1069, April. [Downloadable!] (restricted)
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  19. Himmelberg, Charles P. & Hubbard, R. Glenn & Palia, Darius, 1999. "Understanding the determinants of managerial ownership and the link between ownership and performance," Journal of Financial Economics, Elsevier, vol. 53(3), pages 353-384, September. [Downloadable!] (restricted)
    Other versions:
  20. Irena Grosfeld & Thierry Tressel, 2002. "Competition and ownership structure: Substitutes or complements? Evidence from the Warsaw Stock Exchange," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(3), pages 525-551, November. [Downloadable!] (restricted)
  21. Burkart, Mike & Gromb, Denis & Panunzi, Fausto, 1997. "Large Shareholders, Monitoring, and the Value of the Firm," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 693-728, August.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Katarzyna Mikolajczyk & Barbara M. Roberts, 2004. "Who gets privatised? An empirical analysis of Polish manufacturing," Discussion Papers in Economics 04/9, Department of Economics, University of Leicester. [Downloadable!]
  2. Guriev, Sergei & Rachinsky, Andrei, 2006. "The Evolution of Personal Wealth in the Former Soviet Union and Central and Eastern Europe," Working Papers RP2006/120, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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