Ownership and Firm Performance after Large-Scale Privatization

Abstract

We analyze the effect of ownership on post-privatization performance in a virtually complete population of medium and large firms privatized in a model largescale privatization economy (Czech Republic). We find that concentrated foreign ownership improves economic performance, but domestic private ownership does not, relative to state ownership. Foreign firms engage in strategic restructuring by increasing profit and sales, while domestic firms reduce sales and labor cost without increasing profit. Ownership concentration is associated with superior performance, thus providing support to the agency theory and evidence against theories stressing the positive effects of managerial autonomy and initiative. We find support for a version of the hypothesis that firms restructure by first lowering and later increasing employment. The state as a holder of the golden share stimulates profitable restructuring while pursuing an employment objective, which is understandable in a period of rising unemployment. Our results hence portray the state as a more economically and socially beneficial agent than do some other recent studies. AbstraktAnalyzujeme efekt vlastnictví na poprivatizační výkonnost téměř kompletní populace středních a velkých firem privatizovaných v modelové privatizační ekonomice (Česká republika). Shledáváme, že na rozdíl od domácího, zahraniční vlastnictví zlepšuje ekonomickou výkonnost měřenou vůči státnímu vlastnictví. Zahraniční firmy provádějí strategickou restrukturalizaci tím, že zvyšují zisky a tržby z prodeje, zatímco domácí firmy snižují tržby a náklady na zaměstnance aniž by zvyšovaly zisk. Koncentrace vlastnictví je spojena s vyšší výkonností a podporuje vlastnickou teorii proti teoriím, které vyzdvihují nezávislost a iniciativu manažerů. Nacházíme rovněž podporu hypotézy, že podniky restrukturalizují pomocí snížení a posléze zvýšení nezaměstanosti. Stát, jakožto vlastník zlaté akcie, stimuluje ziskovou restrukturalizaci při zachování zaměstnanosti; toto je pochopitelné v období zvyšující se nezaměstanosti. Naše výsledky vykreslují stát jako hospodářsky a sociálně užitečnější subjekt než jiné současné práce.Keywords: ownership, performance, privatization, panel data, industrial organization JEL Classification: C33, D20, G32, G34, L20

Performance Consequences of Privatizing Egyptian State-Owned Enterprises: The Effect of Post-Privatization Ownership Structure on Firm Performance

“…However, these differences are not significant at any level. Such results are consistent with Kocenda and Svejnar's (2002) findings as they document that majority state-ownership is associated with linearly declining financial leverage. The argument here is that the government might try to carry out strategic restructuring by reducing the debt ratio to be able to sell the remaining stakes of the partially privatized firms.…”

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The effects of ownership structure on corporate value in the Tehran Stock Exchange (TSE)

“…Barberies et al (1996) concluded that any changes in ownership structure led to maximizing company values by considering performance changes in 452 Russian companies. Earle (1998) and Kocenda and Svejnar (2002), reported similar conclusions based on positive impact on private ownership rather than state one in separate studies respectively in countries Russia and Czech Republic by studying the effects of ownership framework on companies performance. Bushee (1998) studied much on this field and stated that institutional investors as a type of corporate ownership structure led to changing companies behavior.…”

Privatisation processes and firm performance : the Libyan industrial sector

“…Frydman, Gray, Hessel, and Rapaczynski (1997) found that outside owners performed better than inside owners on most performance measures, and the impact of foreign investors appears to be no stronger than that of domestic outsiders. The overall study of Kocenda and Svejnar (2003) showed that foreign ownership leads to superior economic performance relative to domestic private and state ownership.…”

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