Financial Efficiency and the Ownership of Czech Firms
CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute); Charles University in Prague; Academy of Sciences of the Czech Republic; Centre for Economic Policy Research (CEPR)
Charles University in Prague - Institute of Economic Studies; Institute of Information Theory and Automation (Czech Academy of Sciences) - Department of Econometrics; CESifo; University of Regensburg - Institute for East and Southeast European Studies; University of Michigan at Ann Arbor - The William Davidson Institute
May 1, 2011
Osteuropa-Institut Regensburg Working Paper No. 300
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
Date posted: July 19, 2011
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