Origin and Concentration: Corporate Ownership, Control and Performance

CERGE-EI Working Paper No. 259

53 Pages Posted: 1 Jun 2005

See all articles by Jan Hanousek

Jan Hanousek

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)

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; University of Michigan at Ann Arbor - The William Davidson Institute

Jan Svejnar

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

Date Written: May 2005

Abstract

We analyze the effects of different types and concentration of ownership on performance using a population of firms in a model transition economy after mass privatization. Specifications based on first-differences and unusual instrumental variables show that contrary to conventional wisdom, the effects of privatization and different types of ownership are limited and many types of private owners do not generate performance that is different from that of firms with state ownership. Concentrated ownership has a positive effect but only in some instances and a positive effect of foreign ownership is detectable primarily for majority ownership and foreign industrial firms. The effects of concentrated ownership support the agency theory and go against theories stressing the positive effects of managerial autonomy. Our results are also consistent with managers or stockholders "looting" the firms. The state as a holder of the golden share has a positive effect on employment and in some specifications also on output and profitability. Overall, our results suggest that the expectations and earlier findings of positive effects of privatization on performance were premature, with the effects of many types of ownership being indistinguishable from that of state ownership.

Keywords: ownership, performance, privatization, corporate governance, panel data, endogeneity, industrial organization

JEL Classification: C33, D20, G32, G34, L20

Suggested Citation

Hanousek, Jan and Kocenda, Evzen and Svejnar, Jan, Origin and Concentration: Corporate Ownership, Control and Performance (May 2005). CERGE-EI Working Paper No. 259, Available at SSRN: https://ssrn.com/abstract=733143 or http://dx.doi.org/10.2139/ssrn.733143

Jan Hanousek (Contact Author)

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Evzen Kocenda

Charles University in Prague - Institute of Economic Studies ( email )

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