Ownership Change, Institutional Development and Performance

57 Pages Posted: 17 Nov 2005 Last revised: 11 May 2013

See all articles by Anzhela Knyazeva

Anzhela Knyazeva

Independent; New York University (NYU) - Leonard N. Stern School of Business

Diana Knyazeva

Independent

Joseph E. Stiglitz

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: March 1, 2013

Abstract

This paper conducts a cross-country empirical study of institutions and agency conflicts around ownership reforms and their implications for changes in performance and efficiency. We examine two main questions. First, we examine the privatization sample and evaluate property rights and institutional quality effects on performance and efficiency. We find that property rights and contracting rights protections contribute to stronger post-privatization performance. Second, we ask whether sectors undergoing changes from state to private ownership exhibit better or worse performance than sectors remaining public. We find an insignificant effect of privatization in ordinary least squares estimates and a negative short-term effect after correcting for endogeneity of privatization decisions that disappears in the long run, consistent with recently privatized enterprises facing short-run costs of restructuring and the challenges of mitigating agency and expropriation concerns.

Keywords: ownership change, property rights, privatization, performance

JEL Classification: G38, G39, L33, G32, K00

Suggested Citation

Knyazeva, Anzhela and Knyazeva, Diana and Stiglitz, Joseph E., Ownership Change, Institutional Development and Performance (March 1, 2013). Journal of Banking and Finance 37(7), 2605–2627. Available at SSRN: https://ssrn.com/abstract=846364 or http://dx.doi.org/10.2139/ssrn.846364

Anzhela Knyazeva

Independent ( email )

No Address Available

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Diana Knyazeva (Contact Author)

Independent ( email )

No Address Available

Joseph E. Stiglitz

Columbia Business School - Finance and Economics ( email )

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814 Uris Hall
New York, NY 10027
United States
(212) 854-0671 (Phone)
(212) 662-8474 (Fax)

HOME PAGE: http://www.josephstiglitz.com

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

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