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Are Oligarchs Productive? Theory and Evidence

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  • Yuriy Gorodnichenko

    (University of Michigan)

  • Yegor Grygorenko

    (Citigroup Russia)

Abstract

This paper develops a partial equilibrium model to account for stylized facts about the behavior of oligarchs, politically and economically strong conglomerates in transition and developing countries. The model predicts that oligarchs are more likely than other owners to invest in productivity enhancing projects and to vertically integrate firms to capture the gains from possible synergies and, thus, oligarchs can be socially beneficial. Using a unique dataset comprising almost 2,000 Ukrainian open joint stock companies, the paper tests empirical implications of the model. In contrast to commonly held views, econometric results suggest that, after controlling for endogeneity of ownership, oligarchs tend to improve the performance of the firms they own relative to other firms.

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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0512013.

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Length: 42 pages
Date of creation: 15 Dec 2005
Date of revision:
Handle: RePEc:wpa:wuwpdc:0512013

Note: Type of Document - pdf; pages: 42
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Web page: http://128.118.178.162

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Keywords: Oligarch; transition; firm performance; property rights; treatment effect;

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References

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Citations

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Cited by:
  1. Saul Estrin & Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2009. "The Effects of Privatization and Ownership in Transition Economies," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 47(3), pages 699-728, September.
  2. Benjamin Maury & Eva Liljeblom, 2009. "Oligarchs, political regime changes, and firm valuation," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 17(3), pages 411-438, 07.
  3. Estrin, Saul & Hanousek, Jan & Svejnar, Jan, 2009. "Effects of Privatization and Ownership in Transition Economies," Policy Research Working Paper Series 4811, The World Bank.
  4. Iwasaki, Ichiro, 2014. "Global financial crisis, corporate governance, and firm survival:," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 178-211.
  5. Guriev, Sergei & Rachinsky, Andrei, 2006. "The Evolution of Personal Wealth in the Former Soviet Union and Central and Eastern Europe," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2006/120, World Institute for Development Economic Research (UNU-WIDER).
  6. Sprenger, Carsten, 2011. "The choice of ownership structure: Evidence from Russian mass privatization," Journal of Comparative Economics, Elsevier, vol. 39(2), pages 260-277, June.
  7. Jürgen Wandel, 2011. "Business groups and competition in post-Soviet transition economies: The case of Russian “agroholdings”," The Review of Austrian Economics, Springer, Springer, vol. 24(4), pages 403-450, December.
  8. Gorodnichenko, Yuriy & Schnitzer, Monika, 2010. "Financial Constraints and Innovation: Why Poor Countries Don't Catch Up," IZA Discussion Papers 4786, Institute for the Study of Labor (IZA).
  9. Muzaffarjon Ahunov & Leo Van Hove & Marc Jegers, 2013. "Selection and hidden bias in cross-border bank acquisitions: Ukraine’s takeover wave," Working Papers, European Bank for Reconstruction and Development, Office of the Chief Economist 162, European Bank for Reconstruction and Development, Office of the Chief Economist.
  10. Salla Pöyry & Benjamin Maury, 2010. "Influential ownership and capital structure," Managerial and Decision Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 31(5), pages 311-324.

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