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Spinoffs, Privatization and Corporate Performance in Emerging Markets

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  • Jan Hanousek
  • Evzen Kocenda
  • Jan Svejnar

Abstract

We use new firm-level data to examine the effects of spinoffs and privatization on corporate performance in a rapidly emerging market economy. Unlike the existing literature, which analyzes spinoffs almost exclusively in advanced economies, we control for accompanying ownership changes and the fact that spinoffs and ownership are endogenous variables. We find that spinoffs increase the firm???s profitability but do not alter its scale of operations, while the effect of privatization depends on the resulting ownership structure ??? sometime improving performance and sometime bringing about decline that is consistent with tunneling (looting) by managers or (partial) owners. The effects of privatization are hence much less clear-cut than suggested in earlier studies. Methodologically, our study provides evidence that it is important to control for changes in ownership when analyzing spinoffs and generally to control for endogeneity, selection and data attrition when analyzing the effects of spinoffs and privatization.

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  • Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2004. "Spinoffs, Privatization and Corporate Performance in Emerging Markets," William Davidson Institute Working Papers Series 2004-685, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2004-685
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    Cited by:

    1. Stepan Jurajda & Juraj Stancik, 2012. "Foreign Ownership and Corporate Performance: The Czech Republic at EU Entry," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(4), pages 306-324, August.
    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. Hanousek, Jan & Kočenda, Evžen & Mašika, Michal, 2012. "Firm efficiency: Domestic owners, coalitions, and FDI," Economic Systems, Elsevier, vol. 36(4), pages 471-486.
    4. Evzen Kocenda & Jan Hanousek, 2012. "Firm break-up and performance," Economics of Governance, Springer, vol. 13(2), pages 121-143, June.
    5. Koráb, Petr & Saadaoui Mallek, Ray & Dibooglu, Sel, 2021. "Effects of quantitative easing on firm performance in the euro area," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    6. Iwasaki, Ichiro & Kočenda, Evžen, 2017. "Are some owners better than others in Czech privatized firms? Even meta-analysis can’t make us perfectly sure," Economic Systems, Elsevier, vol. 41(4), pages 537-568.
    7. Mojtba Rafiei & Seyede Atefe Hosseni Far, 2014. "Effect of State Ownership on Firm Performance and Dividend Payout Policy," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(7), pages 213-219, July.
    8. 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.
    9. Damien Cubizol, 2015. "Unbalanced credit distribution in emerging economies and FDI," Working Papers 1532, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    10. Štěpán Jurajda & Juraj Stančík, 2013. "Organization and Firm Performance in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2013(1), pages 85-110.
    11. Rousova, Linda, 2009. "Are the Central European Stock Markets Still Different? A Cointegration Analysis," Discussion Papers in Economics 10993, University of Munich, Department of Economics.
    12. Yu, Po-yang & Lai, Ching-chong, 2020. "Optimal Privatization and Economic Growth in a Schumpeterian Economy," Journal of Macroeconomics, Elsevier, vol. 64(C).
    13. Evžen Kočenda & Jan Hanousek, 2012. "State ownership and control in the Czech Republic," Economic Change and Restructuring, Springer, vol. 45(3), pages 157-191, August.
    14. Damien Cubizol, 2015. "Unbalanced credit distribution in emerging economies and FDI," Working Papers halshs-01241147, HAL.
    15. Evžen Kočenda & Jan Hanousek, 2010. "Divide and Privatize : Firms Break-up and Performance," Working Papers 291, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    16. Baghdasaryan, Delia & la Cour, Lisbeth, 2013. "Competition, ownership and productivity. A panel analysis of Czech firms," Journal of Economics and Business, Elsevier, vol. 69(C), pages 86-100.

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    More about this item

    Keywords

    Spinoffs; breakups; privatization; corporate performance; endogeneity.;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • P47 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Performance and Prospects

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