IDEAS home Printed from https://ideas.repec.org/p/eer/wpalle/03-01e.html
   My bibliography  Save this paper

Company Performance in Ukraine: What Governs its Success

Author

Listed:
  • Andreyeva Tatiana

Abstract

The observable outcomes of post-Soviet economic reforms have generated large interest and controversy in the transition debate. Privatization and market competition are the two primary forces to induce changes in the firm behavior. The author investigates how firm performance responds to these forces by modeling firm performance in Ukraine. Drawing from panel data on Ukrainian firms for 1996–2000, the study estimates a production function using random-effects and instrumental variable estimators. The analysis finds evidence that firm performance improves significantly with privatization. This effect is particularly strong when several private owners concentrate ownership. There is indication that privatized companies with dominant outside shareholders are most efficient. Another finding is that market competition has little role in determining firm performance in Ukraine.

Suggested Citation

  • Andreyeva Tatiana, 2003. "Company Performance in Ukraine: What Governs its Success," EERC Working Paper Series 03-01e, EERC Research Network, Russia and CIS.
    • Handle: RePEc:eer:wpalle:03-01e
    as

    Download full text from publisher

    File URL: https://eercnetwork.com/default/download/creater/working_papers/file/f8e63b5728e13bdb99fa289970059ad86a655860.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2001. "Competition and Enterprise Performance in Transition Economies from a Cross-Country Survey," CERT Discussion Papers 0101, Centre for Economic Reform and Transformation, Heriot Watt University.
    2. Walsh, Patrick Paul & Whelan, Ciara, 2001. "Firm performance and the political economy of corporate governance: survey evidence for Bulgaria, Hungary, Slovakia and Slovenia," Economic Systems, Elsevier, vol. 25(2), pages 85-112, June.
    3. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    4. Philippe Aghion & Mathias Dewatripont & Patrick Rey, 1999. "Competition, Financial Discipline and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(4), pages 825-852.
    5. Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. "The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-452, June.
    6. Frederic Warzynski, 2000. "The Causes and Consequences of Managerial Change in Ukraine and the Complementarity of Reforms," Econometric Society World Congress 2000 Contributed Papers 1743, Econometric Society.
    7. Estrin, Saul & Rosevear, Adam, 1999. "Enterprise performance and ownership: The case of Ukraine," European Economic Review, Elsevier, vol. 43(4-6), pages 1125-1136, April.
    8. Ann P. Bartel and Ann E. Harrison & Ann P. Bartel and Ann E. Harrison, 1999. "Ownership Versus Environment: Why are Public Sector Firms Inefficient?," William Davidson Institute Working Papers Series 257, William Davidson Institute at the University of Michigan.
    9. Claessens, Stijn & Djankov, Simeon & Pohl, Gerhard, 1997. "Ownership and corporate governance : evidence from the Czech Republic," Policy Research Working Paper Series 1737, The World Bank.
    10. Dutz, Mark & Hayri, Aydin, 1999. "Does More Intense Competition Lead to Higher Growth?," CEPR Discussion Papers 2249, C.E.P.R. Discussion Papers.
    11. Klaus M. Schmidt, 1997. "Managerial Incentives and Product Market Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(2), pages 191-213.
    12. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-1177, December.
    13. Barberis, Nicholas & Maxim Boycko & Andrei Shleifer & Natalia Tsukanova, 1996. "How Does Privatization Work? Evidence from the Russian Shops," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 764-790, August.
    14. Kikeri, Sunita & Nellis, John & Shirley, Mary, 1994. "Privatization: Lessons from Market Economies," The World Bank Research Observer, World Bank, vol. 9(2), pages 241-272, July.
    15. Douglas Kruse & Joseph Blasi, 1995. "Employee Ownership, Employee Attitudes, and Firm Performance," NBER Working Papers 5277, National Bureau of Economic Research, Inc.
    16. Dobrodey Vladimir & Gimadi Ilya & Perevalov Yuri, 2001. "The Impact of Privatisation on the Performance of Medium and Large Industrial Enterprises," EERC Working Paper Series 2k/01e, EERC Research Network, Russia and CIS.
    17. Dyck, I J Alexander, 1997. "Privatization in Eastern Germany: Management Selection and Economic Transition," American Economic Review, American Economic Association, vol. 87(4), pages 565-597, September.
    18. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W., 1994. "Voucher privatization," Journal of Financial Economics, Elsevier, vol. 35(2), pages 249-266, April.
      • Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W., 1993. "Voucher Privatization," Working Papers 85, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
      • Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1994. "Voucher Privatization," Scholarly Articles 30704159, Harvard University Department of Economics.
    19. Frydman, Roman & Gray, Cheryl & Hessel, Marek & Rapaczynski, Andrzej, 1997. "Private Ownership and Corporate Performance: Some Lessons from Transition Economies," Working Papers 97-28, C.V. Starr Center for Applied Economics, New York University.
    20. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-319, March.
    21. Oliver D. Hart, 1983. "The Market Mechanism as an Incentive Scheme," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 366-382, Autumn.
    22. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    23. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    24. Earle, John & Estrin, Saul & Leshchenko, Larisa, 1996. "Ownership structures, patterns of control and enterprise behavior in Russia," LSE Research Online Documents on Economics 20642, London School of Economics and Political Science, LSE Library.
    25. Nandini Gupta & John Ham & Jan Svejnar, 2000. "Priorities and Sequencing in Privatization: Theory and Evidence from the Czech Republic," Econometric Society World Congress 2000 Contributed Papers 1580, Econometric Society.
    26. Frydman, Roman & Gray, Cheryl W. & Hessel, Marek & Rapaczynski, Andrzej, 1997. "Private ownership and corporate performance : some lessons from transition economies," Policy Research Working Paper Series 1830, The World Bank.
    27. Carlin, Wendy & Fries, Steven & Schaffer, Mark & Seabright, Paul, 2001. "Competition and Enterprise Performance in Transition Economies: Evidence from a Cross-country Survey," CEPR Discussion Papers 2840, C.E.P.R. Discussion Papers.
    28. Konings, Jozef, 1997. "Competition and Firm Performance in Transition Economies: Evidence from Firm Level Surveys in Slovenia, Hungary and Romania," CEPR Discussion Papers 1770, C.E.P.R. Discussion Papers.
    29. Blanchard, O. & Aghion, P., 1996. "On insider privatization," European Economic Review, Elsevier, vol. 40(3-5), pages 759-766, April.
    30. J. Stiglitz, 1999. "Whither Reform? Ten Years of the Transition," Voprosy Ekonomiki, NP Voprosy Ekonomiki, vol. 7.
    31. Demsetz, Harold, 1983. "The Structure of Ownership and the Theory of the Firm," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 375-390, June.
    32. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(3), pages 529-554.
    33. Earle, John S & Estrin, Saul, 1997. "After Voucher Privatization: The Structure of Corporate Ownership in Russian Manufacturing Industry," CEPR Discussion Papers 1736, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. J. David Brown & John S. Earle & Solomiya Shpak & Volodymyr Vakhitov, 2019. "Is Privatization Working in Ukraine?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(1), pages 1-35, March.
    2. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    3. Vitaliy Zheka, 2005. "Corporate governance, ownership structure and corporate efficiency: the case of Ukraine," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(7), pages 451-460.
    4. Brown, J. David & Earle, John S. & Shpak, Solomiya & Vakhitov, Volodymyr, 2015. "Is Privatization Working in Ukraine? New Estimates from Comprehensive Manufacturing Firm Data, 1989-2013," IZA Discussion Papers 9261, Institute of Labor Economics (IZA).
    5. 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, vol. 47(3), pages 699-728, September.
    6. Elena Besedina, 2010. "Exporting, Productivity and Government Interventions: Is There a Link?," Discussion Papers 28, Kyiv School of Economics.
    7. Vitaliy Zheka, 2006. "Corporate Governance and Firm Performance in Ukraine," CERT Discussion Papers 0605, Centre for Economic Reform and Transformation, Heriot Watt University.
    8. Ichiro Iwasaki & Satoshi Mizobata, 2020. "Ownership Concentration and Firm Performance in European Emerging Economies: A Meta-Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(1), pages 32-67, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yu, Wusheng & Jensen, Trine Vig, 2003. "Trade Preferences, WTO Negotiations and the LDCs: the case of the "Everything But Arms" Initiative," Conference papers 331124, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Schnytzer, Adi & Andreyeva, Tatiana, 2002. "Company performance in Ukraine: is this a market economy?," Economic Systems, Elsevier, vol. 26(2), pages 83-98, June.
    3. Yurii Perevalov & Ilya Gimadii & Vladimir Dobrodei, 2000. "Does Privatisation Improve Performance of Industrial Enterprises? Empirical Evidence from Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 12(3), pages 337-363.
    4. Simeon Djankov & Stijn Claessens, 1997. "Enterprise Performance and Managers' Profiles," William Davidson Institute Working Papers Series 115, William Davidson Institute at the University of Michigan.
    5. Harper, Joel T., 2002. "The performance of privatized firms in the Czech Republic," Journal of Banking & Finance, Elsevier, vol. 26(4), pages 621-649, April.
    6. Barbara Blaszczyk & Iraj Hashi & Alexander Radygin & Richard Woodward, 2003. "Corporate Governance and Ownership Structure in the Transition: The Current State of Knowledge and Where to Go from Here," CASE Network Studies and Analyses 0264, CASE-Center for Social and Economic Research.
    7. Richard B. Goud Jr., 2002. "Ownership and Firm Performance: Evidence from 25 Countries in Central and Eastern Europe and the Former Soviet Union," Development and Comp Systems 0207002, University Library of Munich, Germany.
    8. Dobrodey Vladimir & Gimadi Ilya & Perevalov Yuri, 2001. "The Impact of Privatisation on the Performance of Medium and Large Industrial Enterprises," EERC Working Paper Series 2k/01e, EERC Research Network, Russia and CIS.
    9. Goergen, Marc & Manjon, Miguel C. & Renneboog, Luc, 2008. "Recent developments in German corporate governance," International Review of Law and Economics, Elsevier, vol. 28(3), pages 175-193, September.
    10. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    11. Simeon Djankov, 1999. "Ownership Structure and Enterprise Restructuring in Six Newly Independent States," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 41(1), pages 75-95, April.
    12. Brown, David J. & Earle, John S. & Telegdy, Almos, 2016. "Where does privatization work? Understanding the heterogeneity in estimated firm performance effects," Journal of Corporate Finance, Elsevier, vol. 41(C), pages 329-362.
    13. Earle, John S. & Telegdy, Almos, 2002. "Privatization Methods and Productivity Effects in Romanian Industrial Enterprises," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 657-682, December.
    14. Mr. Alexander Pivovarsky, 2001. "How Does Privatization Work? Ownership Concentration and Enterprise Performance in Ukraine," IMF Working Papers 2001/042, International Monetary Fund.
    15. Alan Bevan & Saul Estrin & Mark E. Schaffer, 1999. "Determinants of Enterprise Performance during Transition," CERT Discussion Papers 9903, Centre for Economic Reform and Transformation, Heriot Watt University.
    16. Warzynski, Frederic, 2003. "Managerial change, competition, and privatization in Ukraine," Journal of Comparative Economics, Elsevier, vol. 31(2), pages 297-314, June.
    17. Djankov, Simeon, 1999. "Restructuring of insider-dominated firms," Policy Research Working Paper Series 2046, The World Bank.
    18. Xiaonian Xu & Yan Wang, 1997. "Ownership structure, corporate governance, and corporate performance : the case of Chinese stock companies," Policy Research Working Paper Series 1794, The World Bank.
    19. 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.
    20. Saul Estrin & Alan A. Bevan & Boris Kuznetsov & Mark E. Schaffer & Manuela Angelucci & Julian Fennema & Giovanni Mangiarotti, 2001. "The Determinants of Privatised Enterprise Performance in Russia," William Davidson Institute Working Papers Series 452, William Davidson Institute at the University of Michigan.

    More about this item

    Keywords

    Ukraine; firm performance; ownership structure; competition; transition economy;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eer:wpalle:03-01e. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anton Pashchenko (email available below). General contact details of provider: http://www.eercnetwork.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.