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Ownership and Firm Performance: Evidence from 25 Countries in Central and Eastern Europe and the Former Soviet Union

Author

Listed:
  • Richard B. Goud Jr.

    (Reed College undergraduate student)

Abstract

Using the joint World Bank and EBRD Business Environment and Enterprise Performance Survey (BEEPS), compiled in 1999, this paper explores the relationship between firm performance and ownership in Central and Eastern Europe (CEE) and the Former Soviet Union (FSU). The literature on privatization and performance has been largely inconclusive, especially now that sample selection bias is taken into account. This paper provides evidence that foreign owned firms perform the best, performing significantly better than state owned enterprises, while firms whose owners are domestic outside companies or individuals also perform better than state owned enterprises but the result is somewhat sensitive to the specification of the model. The more significant, albeit puzzling result, is that insider owned firms perform worse than state owned firms. This result is not significant when looking at manager and worker owned firms separately. In further work, I will explore the determinants of this puzzling result.

Suggested Citation

  • 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, EconWPA.
    • Handle: RePEc:wpa:wuwpdc:0207002
    Note: Type of Document - PDF; pages: 18; figures: No figures but a few tables all at the end of the paper.
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    File URL: http://econwpa.repec.org/eps/dev/papers/0207/0207002.pdf
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    References listed on IDEAS

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    1. John S. Earle, 1999. "Post-Privatisation Ownership Structure and Productivity in Russian Industrial Enterprises," Working Papers 1999.19, Fondazione Eni Enrico Mattei.
    2. Lubomir Lizal & Jan Svejnar, 1997. "Enterprise Investment During the Transition: Evidence from Czech Panel Data," William Davidson Institute Working Papers Series 60, William Davidson Institute at the University of Michigan.
    3. 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.
    4. Nellis, J., 1999. "Time to Rethink Privatization in Transition Economies?," Papers 38, World Bank - International Finance Corporation.
    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. Roland, Gerard & Sekkat, Khalid, 2000. "Managerial career concerns, privatization and restructuring in transition economies," European Economic Review, Elsevier, vol. 44(10), pages 1857-1872, December.
    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. 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.
    9. Konings, Jozef, 1997. "Firm growth and ownership in transition countries," Economics Letters, Elsevier, vol. 55(3), pages 413-418, September.
    10. Kikeri, Sunita & Nellis, John & Shirley, Mary, 1994. "Privatization: Lessons from Market Economies," World Bank Research Observer, World Bank Group, vol. 9(2), pages 241-272, July.
    11. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-319, March.
    12. A. Marcincin & S. van Wijnbergen, 1997. "The Impact of Czech Privatisation Methods on Enterprise Performance Incorporating Initial Selection Bias Correction," CERT Discussion Papers 9704, Centre for Economic Reform and Transformation, Heriot Watt University.
    13. 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.
    14. 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.
    15. Blanchard, O. & Aghion, P., 1996. "On insider privatization," European Economic Review, Elsevier, vol. 40(3-5), pages 759-766, April.
    16. Roman Frydman & Cheryl Gray & Marek Hessel & Andrzej Rapaczynski, 1999. "When Does Privatization Work? The Impact of Private Ownership on Corporate Performance in the Transition Economies," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1153-1191.
    17. Georgiy Nikitin & Andrew Weiss, "undated". "Effects of Ownership Composition on Performance: Evidence from the Czech Republic," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-116, Boston University - Department of Economics, revised Dec 2001.
    18. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521331494, March.
    19. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521589857, March.
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    Citations

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    Cited by:

    1. Ichiro Iwasaki & Satoshi Mizobata, 2017. "Post-Privatization Ownership and Firm Performance: A Large Meta-Analysis of the Transition Literature," KIER Working Papers 966, Kyoto University, Institute of Economic Research.
    2. Jiang, Bing-Bing & LAURENCESON, James & Tang, Kam Ki, 2008. "Share reform and the performance of China's listed companies," China Economic Review, Elsevier, vol. 19(3), pages 489-501, September.
    3. Juan Manuel San Martin-Reyna & Jorge A. Duran-Encalada, 2015. "Effects of Family Ownership, Debt and Board Composition on Mexican Firms Performance," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 3(1), pages 1-19, March.

    More about this item

    Keywords

    transition; privatization; ownership; firm performance;

    JEL classification:

    • P - Economic Systems

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