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The Emergence of Large Shareholders in Mass Privatized Firms: Evidence from Poland and the Czech Republic

Author

Listed:
  • Irena Grosfeld

    (Delta-Fédération Jourdan, CNRS)

  • Iraj Hashi

    (Staffordshire University)

Abstract

Mass privatization offers a particularly suitable framework to study the change in ownership concentration as the extent of change is unusual for a stable market economy. Focusing on two different mass privatization schemes in two transition economies, Poland and the Czech Republic, we find that despite important differences in the design of the two programmes and despite different quality of legal and regulatory framework, ownership structure in the two countries has rapidly evolved and the emerging ownership patterns are remarkably similar. This suggests that private benefits of control are large and the quality of investor protection regime is low in both countries. However, looking at the relationship between the change in ownership concentration and firm performance, we find an interesting difference between the two countries: in the Czech Republic the increase in ownership concentration seems to be less likely in poorly performing firms while in Poland the quality of past performance does not affect investors' willingness to increase their holdings. This effect may be interpreted in the light of the theory stressing the importance of the quality of investors' protection. It could be argued that if Czech investors are more risk averse and more concerned with diversification this is largely due to the weakness of the legal protection they face.

Suggested Citation

  • Irena Grosfeld & Iraj Hashi, 2004. "The Emergence of Large Shareholders in Mass Privatized Firms: Evidence from Poland and the Czech Republic," Working Papers 2004.126, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2004.126
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Irena Grosfeld, 2009. "Large shareholders and firm value: Are high-tech firms different?," Working Papers halshs-00587856, HAL.
    2. Grosfeld, Irena, 2009. "Large shareholders and firm value: Are high-tech firms different?," Economic Systems, Elsevier, vol. 33(3), pages 259-277, September.
    3. Jan Hagemejer & Joanna Tyrowicz & Jan Svejnar, 2014. "Measuring the Causal Effect of Privatization on Firm Performance," Working Papers 2014-14, Faculty of Economic Sciences, University of Warsaw.
    4. Irena Grosfeld, 2006. "Ownership concentration & firm performance: Evidence from an emerging market," William Davidson Institute Working Papers Series wp834, William Davidson Institute at the University of Michigan.
    5. Zorica Kalezić, 2015. "Ownership Concentration and Firm Performance in Transition Economies: Evidence from Montenegro," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 4(3), pages 5-64.
    6. Irena Grosfeld, 2006. "Ownership concentration and firm performance: Evidence from an emerging market," Working Papers halshs-00590485, HAL.

    More about this item

    Keywords

    Ownership concentration; Mass privatisation; Corporate governance; Transition;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions
    • P5 - Economic Systems - - Comparative Economic Systems

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