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The Impact of Czech Privatisation Methods on Enterprise Performance Incorporating Initial Selection Bias Correction

  • A. Marcincin
  • S. van Wijnbergen

Governments with transitional economies have applied different privatisation methods, from an almost free distribution to the direct sales of state assets. While a free distribution was believed to ensure the political feasibility of the program and its fairness, direct sales, or more generally, standard privatisation methods had a significant advantage in creating concentrated ownership structures as the prerequisite to corporate control and restructuring. Many economists believe that the two goals of mass privatisation, political feasibility and creation of proper ownership incentives, contradict each other and recent empirical comparisons of enterprises seem to support their view. However, all empirical works have been based on the weak assumption that privatisation methods were applied on a randomly selected samples of enterprises, which then allowed for a direct comparison between these enterprises. Our main claim is that governments indeed selected enterprises non-randomly and therefore, the resulting selection bias must be incorporated into the analyses. To show this, we apply a Heckman two-step regression method on a sample of 559 Czech enterprises. The main point of this paper then is that performance is influenced by the selection process and combination of vouchers with outsider owners is preferred over 100% voucherisation.

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Paper provided by Centre for Economic Reform and Transformation, Heriot Watt University in its series CERT Discussion Papers with number 9704.

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Date of creation: 1997
Date of revision:
Handle: RePEc:hwe:certdp:9704
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  1. Roland, G. & Verdier, T., 1991. "Privatization in Eastern Europe: Irreversibility and Critical Mass Effects," DELTA Working Papers 91-21, DELTA (Ecole normale supérieure).
  2. Rodrik, Dani, 1989. "Promises, Promises: Credible Policy Reform via Signalling," Economic Journal, Royal Economic Society, vol. 99(397), pages 756-72, September.
  3. David Lipton & Jeffrey Sachs, 1990. "Privitization in Eastern Europe: The Case of Poland," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(2), pages 293-342.
  4. Marcincin, Anton & van Wijnbergen, Sweder, 1995. "Voucher Privatization, Corporate Control and the Cost of Capital: An Analysis of the Czech Privatization Programme," CEPR Discussion Papers 1215, C.E.P.R. Discussion Papers.
  5. Dewatripont, Mathias & Roland, Gérard, 1991. "The Virtues of Gradualism and Legitimacy in the Transition to a Market Economy," CEPR Discussion Papers 538, C.E.P.R. Discussion Papers.
  6. Anton Marcinèin, 1995. "Korporatívne riadenie a jeho vplyv na cenu akcii (Corporate Governance and Its Impact on Share Prices)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 45(8), pages 419-428, August.
  7. Greene, William H, 1981. "Sample Selection Bias as a Specification Error: Comment," Econometrica, Econometric Society, vol. 49(3), pages 795-98, May.
  8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  9. John Vickers & George Yarrow, 1991. "Economic Perspectives on Privatization," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 111-132, Spring.
  10. Aghion, Philippe, 1993. "Economic reform in Eastern Europe : Can theory help?," European Economic Review, Elsevier, vol. 37(2-3), pages 525-532, April.
  11. M Belka & S Estrin & M Schaffer & I.J. Singh, 1995. "Enterprise Adjustment in Poland: Evidence from a Survey of 200 Private," CEP Discussion Papers dp0233, Centre for Economic Performance, LSE.
  12. Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-55, December.
  13. Claessens, Stijn, 1995. "Corporate governance and equity prices : evidence from the Czech and Slovak Republics," Policy Research Working Paper Series 1427, The World Bank.
  14. Aghion, Philippe & Blanchard, Olivier J & Carlin, Wendy, 1994. "The Economics of Enterprise Restructuring in Central and Eastern Europe," CEPR Discussion Papers 1058, C.E.P.R. Discussion Papers.
  15. Riboud, Michelle & Hong Tan & Revenga, Ana, 1992. "The impact of Mexico's retraining program on employment and wages," Policy Research Working Paper Series 1013, The World Bank.
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