Enterprise Breakups and Performance During the Transition

CERGE-EI Working Paper Series No. 116

34 Pages Posted: 25 Jan 2010

See all articles by Lubomir Lizal

Lubomir Lizal

Czech Technical University - Faculty of Electrical Engineering; Anglo-American University; Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences

Miroslav Singer

Expandia Holdings Group; Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences

Jan Svejnar

School of International and Public Affairs, Columbia University, NY, USA; CEPR; IZA; CERGE-EI; University of Ljubljana

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Date Written: March 1, 1997

Abstract

In this paper we estimate the effects of the 1991 breakups of Czechoslovak state owned enterprises (SOEs) on subsequent performance of the master enterprises and the spun-off units. Our analysis is based on quarterly and annual data of Czechoslovak industrial enterprises. We estimate the performance effect of a spinoff by comparing the performance of enterprises that were present throughout the 1990-92 period but did not experience any spinoffs to the performance of (a) master enterprises that experienced spinoffs and (b) the newly spun off subsidiaries. Our estimates suggest that the breakups had a significant immediate (1991) effect on productive efficiency and profitability of industrial firms. The effect was positive for small to slightly above average size spinoffs and negative for large ones. One also cannot reject the hypothesis that the estimated effect of spinoffs on performance was identical for the spun off subsidiaries and the master enterprises that experienced the spinoffs. Our 1991 estimates hence strongly suggest that the large firms created under the centrally planned system suffered from inefficiencies that were alleviated by the breakups of these firms into smaller units.

Suggested Citation

Lizal, Lubomir and Singer, Miroslav and Svejnar, Jan, Enterprise Breakups and Performance During the Transition (March 1, 1997). CERGE-EI Working Paper Series No. 116, Available at SSRN: https://ssrn.com/abstract=1540889 or http://dx.doi.org/10.2139/ssrn.1540889

Lubomir Lizal (Contact Author)

Czech Technical University - Faculty of Electrical Engineering ( email )

Technicka 2
Jug. Partyzanu 3
Prague 6, 166 27
Czech Republic

Anglo-American University ( email )

Lazenska 4
11800 Praha 1
Prague 1, 11800
Czech Republic

Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences ( email )

Politickych veznu 7
Prague, 111 21
Czech Republic
+420 2 2400 5114 (Phone)
+420 2 2422 7143 (Fax)

HOME PAGE: http://www.cerge-ei.cz

Miroslav Singer

Expandia Holdings Group ( email )

Na Prikope 19
117 19 Prague 1
Czech Republic

Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences ( email )

Politickych veznu 7
Prague, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

Jan Svejnar

School of International and Public Affairs, Columbia University, NY, USA ( email )

420 West 118th Street
New York, NY 10027
United States

CEPR

London
United Kingdom

IZA

P.O. Box 7240
Bonn, D-53072
Germany

CERGE-EI

P.O. Box 882
7 Politickych veznu
111 21 Prague 1, Prague
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

University of Ljubljana ( email )

Dunajska 104
Ljubljana, 1000
Slovenia

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