Determinants of Foreign Ownership in Newly Privatized Companies in Transition Economies
Christopher W. Anderson
University of Kansas - School of Business
University of Arkansas - Sam M. Walton College of Business
Anil K. Makhija
Ohio State University (OSU) - Department of Finance
Financial Review, May 2001
We investigate determinants of foreign ownership in newly privatized firms. We analyze data on privatized Czech firms to address two related general questions. First, what characteristics distinguish transition firms that attract a foreign investor? Second, how do firm-specific characteristics influence the size of the foreign equity stake? Our results suggest that foreign investors i) seek safe, profitable firms in which they can exert unchallenged influence on corporate governance and then ii) structure their equity stakes to mitigate agency costs and political risk.
Accepted Paper Series
Date posted: August 13, 2001
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