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Financial Efficiency and the Ownership of Czech FirmsJan HanousekCERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) Evzen KocendaCharles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute); CESifo; University of Michigan at Ann Arbor - The William Davidson Institute; Osteuropa Institut; Centre for Economic Policy Research (CEPR) Michal MasikaLudwig-Maximilians-Universität Munich May 1, 2011 Osteuropa-Institut Regensburg Working Paper No. 300 Abstract: In this paper we analyze the evolution of firm financial efficiency in the Czech Republic. Using a large panel of more than 400,000 Czech firm/years we study whether firms fully utilize their resources, how firm financial efficiency evolves over time, and how firm financial efficiency is determined by ownership structure. We employ a panel version of a stochastic production frontier model for the period 1996-2007 with time-invariant efficiency. We differentiate among various degrees of ownership concentration and their domestic or foreign origin. In a two-stage set-up we estimate the degree of firm inefficiency and then we estimate the effect of ownership structure on the distance from the efficiency frontier. Our results support the hypothesis that concentration and foreign ownership are positively related to financial efficiency.
Number of Pages in PDF File: 38 Keywords: financial efficiency, ownership structure, firms, panel data, stochastic frontier JEL Classification: C33, D24, G32, L60, L80, M21 working papers seriesDate posted: July 19, 2011Suggested CitationContact Information
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