Divide and Privatize: Firms Break-Up and Performance

Kočenda, Evžen; Hanousek, Jan

doi:10.2139/ssrn.1713232

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Divide and Privatize: Firms Break-Up and Performance

Osteuropa-Institut Regensburg Working Paper No. 291

31 Pages Posted: 22 Nov 2010

See all articles by Evžen Kočenda

Evžen Kočenda

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

Jan Hanousek

Faculty of Business and Economics, Mendel University in Brno; Centre for Economic Policy Research (CEPR)

Date Written: October 1, 2010

Abstract

We analyze the long-term effects of divesture and ownership change on corporate performance. We employ a unique data set for a large number of Czech firms spanning the period 1996-2005. We employ a propensity score matching procedure to deal with endogeneity problems. Our results, which are generally in line with the positive effects of divestiture found in the developed-market literature, show that the initial effects of divestiture are positive but after a certain point they quickly diminish over time.

Keywords: Firm Divestiture, Corporate Performance, Ownership Changes, Privatization, Emerging Markets, Endogeneity, Propensity Score Matching Procedure

JEL Classification: D23, G32, G34, L20, M21, P47

Suggested Citation: Suggested Citation

Kocenda, Evzen and Hanousek, Jan, Divide and Privatize: Firms Break-Up and Performance (October 1, 2010). Osteuropa-Institut Regensburg Working Paper No. 291, Available at SSRN: https://ssrn.com/abstract=1713232 or http://dx.doi.org/10.2139/ssrn.1713232