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Mass Privatisation, Corporate Governance and Endogenous Ownership Structure

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  • Irena Grosfeld

    ()

  • Iraj Hashi

    ()

Abstract

We compare the change in ownership concentration in firms privatized through two different programs of mass privatization: the Czech voucher scheme and the Polish program of National Investment Funds. Despite important differences in ownership structure at the start of the process and in the quality of legal and regulatory environments, the emerging ownership patterns are remarkably similar: in the two groups of firms we observe high concentration and the emergence of industrial corporations and individuals as important dominant shareholders. Given the important evolution of ownership, we take ownership structure as endogenous and look at its determinants. We find in particular that ownership concentration depends on the degree of uncertainty in the firm's environment. In a more risky environment firms tend to have more dispersed ownership. We interpret this result in the light of the recent theories of the firm stressing the trade-off between managerial initiative and shareholder control.

Suggested Citation

  • Irena Grosfeld & Iraj Hashi, 2003. "Mass Privatisation, Corporate Governance and Endogenous Ownership Structure," William Davidson Institute Working Papers Series 2003-596, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2003-596
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    References listed on IDEAS

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    Cited by:

    1. Simoneti, Marko & Damijan, Joze P. & Rojec, Matija & Majcen, Boris, 2005. "Case-by-Case Versus mass privatization in transition economies: Initial owner and final seller effects on performance of firms in Slovenia," World Development, Elsevier, vol. 33(10), pages 1603-1625, October.

    More about this item

    Keywords

    Corporate governance; privatization; transition; ownership structure;

    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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