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The Economic Effects of Privatization: Evidence from a Russian Panel

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  • Derek C Jones

Abstract

By using new panel survey data for 1992–1996 for a sample of firms in St. Petersburg we present evidence on the incidence of, changes in, and the effects of ownership and control that have occurred since privatization. We find that ownership changes have been quite fast and are heterogeneous. Ownership by insiders remains very strong and the importance of managerial insider ownership is growing. At the same time, in many firms, ownership by outsiders assumes increasing significance. The links between ownership and control are found to be quite complex.Whether these organizational changes affect economic performance is investigated in a series of preliminary exercises in which we estimate models in “privatization time.“ We find that the impact of privatization per se is quite weak and thus appears to be quite different from what has been found in studies for some other transition economies. In accounting for differences in economic performance, for all performance measures we find support for the hypothesis that the preferred specification includes measures not only of ownership levels at the end of the period but also ownership-transitions and variables which capture variation in the level of control. Bank ownership is shown to be much more effective in improving economic performance than is ownership by individuals. Firms which remain employee owned performed much more poorly than did firms in which managers continued as the dominant owners. However, both types of firms which became owned by managers during the period did very badly, and especially firms which were formerly owned by the state. There is evidence that low and medium levels of managerial power typically have beneficial effects on economic performance. Evidence of the effects of changes in control on economic performance typically is much weaker.

Suggested Citation

  • Derek C Jones, 1998. "The Economic Effects of Privatization: Evidence from a Russian Panel," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 40(2), pages 75-102, July.
  • Handle: RePEc:pal:compes:v:40:y:1998:i:2:p:75-102
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    Citations

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    Cited by:

    1. Polterovich, Victor, 2000. "Employment- wage decisions in the insider-owned firm," BOFIT Discussion Papers 1/2000, Bank of Finland, Institute for Economies in Transition.
    2. Helena Hannula, 2001. "Restructuring of the Estonian economy and the role of FDIs in it," University of Tartu - Faculty of Economics and Business Administration,in: Foreign Direct Investments in the Estonian Economy, volume 9, chapter 3, pages 91-174 Faculty of Economics and Business Administration, University of Tartu (Estonia).
    3. Полтерович В.М., 2003. "Парадоксы Российского Рынка Труда И Теория Коллективных Фирм," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 39(2), апрель.
    4. Janos Kollő & Tomasz Mickiewicz, 2005. "Wage Bargaining, Privatisation, Ability to Pay and Outside Options: Evidence from Hungary," Post-Communist Economies, Taylor & Francis Journals, vol. 17(4), pages 465-483.
    5. Alexei Izyumov & Leonid Kosals & Rosalina Ryvkina, 2000. "Defence Industry Transformation in Russia: Evidence from a Longitudinal Survey," Post-Communist Economies, Taylor & Francis Journals, vol. 12(2), pages 215-228.
    6. Polterovich, Victor, 2001. "Трансплантация Экономических Институтов
      [Transplantation of Economic Institutions]
      ," MPRA Paper 22034, University Library of Munich, Germany.
    7. Ichiro Iwasaki & Satoshi Mizobata, 2017. "Post-Privatization Ownership and Firm Performance: A Large Meta-Analysis of the Transition Literature," KIER Working Papers 966, Kyoto University, Institute of Economic Research.
    8. Estrin, Saul & Wright, Mike, 1999. "Corporate Governance in the Former Soviet Union: An Overview," Journal of Comparative Economics, Elsevier, vol. 27(3), pages 398-421, September.
    9. Linz, Susan J., 2004. "Motivating Russian workers: analysis of age and gender differences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(3), pages 261-289, July.
    10. Susan Linz, 2000. "Restructuring with What Success? A Case Study of Russian Firms," William Davidson Institute Working Papers Series 324, William Davidson Institute at the University of Michigan.
    11. Irina Akimova & Gerhard Schwödiauer, 1999. "Restructuring of Ukrainian Enterprises after Privatization: Does Ownership Structure Matter?," Industrial Organization 9903003, EconWPA.
    12. Irina Denisova & Stanislav Kolenikov & Ksenia Yudaeva, 2000. "Child Benefits and Child Poverty," Working Papers w0006, Center for Economic and Financial Research (CEFIR).
    13. Saul Estrin, 2002. "Competition and Corporate Governance in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 101-124, Winter.
    14. Ichiro Iwasaki, 2007. "Enterprise Reform And Corporate Governance In Russia: A Quantitative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(5), pages 849-902, December.
    15. Ichiro Iwasaki & Satoshi Mizobata & Alexander A. Muravyev, 2017. "Ownership Dynamics and Firm Performance in an Emerging Economy: A Meta-Analysis of the Russian Literature," KIER Working Papers 955 Classification-JD22, , Kyoto University, Institute of Economic Research.
    16. Polterovich, Victor, 2000. "Civic Culture and Economic Transition in Russia," MPRA Paper 20068, University Library of Munich, Germany.
    17. Tomasz Mickiewicz & Kate Bishop, 2003. "Wage Determination: Privatised, New Private And State Owned Companies. Empirical Evidence From Panel Data," William Davidson Institute Working Papers Series 584, William Davidson Institute at the University of Michigan.
    18. Jones, Derek C. & Mygind, Niels, 1999. "The Nature and Determinants of Ownership Changes after Privatization: Evidence from Estonia," Journal of Comparative Economics, Elsevier, vol. 27(3), pages 422-441, September.
    19. 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.
    20. Alexei Izyumov & Leonid Kosals & Rosalina Ryvkina, 2000. "Privatisation of the Russian Defence Industry: Ownership and Control Issues," Post-Communist Economies, Taylor & Francis Journals, vol. 12(4), pages 485-496.
    21. Saul Estrin, 2001. "Competition and Corporate Governance in Transition," William Davidson Institute Working Papers Series 431, William Davidson Institute at the University of Michigan.
    22. Катышев П.К. & Полтерович В.М., 2006. "Политика Реформ, Начальные Условия И Трансформационный Спад," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 42(4), октябрь.
    23. Kazuhiro Ohnishi, 2011. "A Quantity-Setting Mixed Duopoly with Inventory Investment as a Coordination Device," Annals of Economics and Finance, Society for AEF, vol. 12(1), pages 109-119, May.
    24. Polterovich, Victor, 2008. "Современное Состояние Теории Экономических Реформ
      [Modern Condition of the Theory of Economic Reforms]
      ," MPRA Paper 22032, University Library of Munich, Germany.

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