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Insider Privatisation and Restructuring Incentives

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  • Philipp Schröder

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Abstract

In the literature on privatisation and restructuring it is a generally held belief that manager owned firms will be restructured more rigorously than worker owned companies. This gives the clear recommendation that property rights and control rights should be allocated to managers in the process of (insider-) privatisation. One of the implied arguments is, that managers' career concerns will make them eager to prove their ability by improving company efficiency. The present model shows that in the transition context managers' career concerns might result in the opposite effect. If the bulk of job opportunities are in worker controlled firms, the managers of the few manager controlled firms will want to appear soft on excess labour capacity – hence, restructure less harshly – in order to improve their career opportunities. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • Philipp Schröder, 2003. "Insider Privatisation and Restructuring Incentives," Economic Change and Restructuring, Springer, vol. 36(4), pages 333-349, December.
  • Handle: RePEc:kap:ecopln:v:36:y:2003:i:4:p:333-349 DOI: 10.1023/B:ECOP.0000038298.15221.14
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    References listed on IDEAS

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    Cited by:

    1. Gloria Cuevas-Rodriguez & Jaime Guerrero-Villegas & Ramón Valle-Cabrera, 2014. "Privatization effects on corporate governance, strategy and compensation systems," Working Papers 14.03, Universidad Pablo de Olavide, Department of Business Organization and Marketing (former Department of Business Administration).

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