After Voucher Privatization: The Structure of Corporate Ownership in Russian Manufacturing Industry

This paper analyses the ownership structure emerging from the Russian privatization process, using information from a sample survey of 439 state and privately-owned manufacturing companies conducted in July 1994, just after the voucher programme was completed. The Russian ownership structure calls for a new approach to the analysis of corporate control because of the presence of multiple types of owners pursuing conflicting objectives and facing different constraints, and because of the weakness of other corporate governance mechanisms in the Russian economy. We distinguish four important categories of owners: the state, workers, managers, and outside investors (of which we consider several types). Our empirical results include new findings on the distribution of ownership across these categories, on the implications of alternative privatization methods for ownership structure, on the incidence of non-voting and voting shares, and on the extent of concentration of ownership within groups (with a particular focus on outside blockholders). As potential determinants of the ownership structure, we investigate measures of the size, complexity, capital intensity, and industrial relations of firms, the impact of regulation and other state actions, and the heterogeneity of the firm’s productive activities and of its work-force. Finally, we examine the effects of ownership structure on enterprise performance, measured by labour productivity, several types of restructuring, and an overall index of restructuring activity. We find evidence of positive effects of private ownership on enterprise performance. The effects vary across types of private owners, however, with managerial and institutional investor ownership having the strongest and most robust impacts, the latter accounted for mostly by investment fund ownership, which has an impact estimated to be quite large in a number of specifications. Remarkably, the impact on performance of outsider blockholders appears to be strengthened in the instrumental variables (IV) estimates compared to the ordinary least squares (OLS) estimates, suggesting that the privatization process may have contained a negative selection bias with respect to ownership by outside investors.