Roman Frydman | New York University (original) (raw)

Papers by Roman Frydman

SSRN-Investing in Insider-Dominated Firms: A Study of Russian Voucher Privatization Funds by Roma... more SSRN-Investing in Insider-Dominated Firms: A Study of Russian Voucher Privatization Funds by Roman Frydman, Katharina Pistor, Andrzej Rapaczynski. ...

Economics of Transition, 1993

* Department of Economics New York University New York NY 10003 Tel:+(1)212-998 8967 ... ** Depar... more * Department of Economics New York University New York NY 10003 Tel:+(1)212-998 8967 ... ** Department of Economics Columbia University New York NY 10027 Tel:+(1)412-854 2060 ... That enterprises are operated in the interests of the owners, approximately at any rate, ...

Economics of Transition, 1995

1 The authors are grateful to the CEU Foundation, the Open Society Institute and the World Bank f... more 1 The authors are grateful to the CEU Foundation, the Open Society Institute and the World Bank for supporting research on this paper. CV Starr Center for Applied Economics at New York University has provided additional support for Roman Frydman's research. None of these institution ...

This paper, based on a study of mid-sized firms in the Czech Republic, Hungary, and Poland, seeks... more This paper, based on a study of mid-sized firms in the Czech Republic, Hungary, and Poland, seeks to explain the reasons behind the marked impact of ownership on firm performance which has been observed in a number of studies in Eastern Europe and other parts of the world. Focusing in particular on the differential impact of ownership on revenue and cost performance, the paper argues that privatized firms controlled by outside investors are more entrepreneurial than those controlled by corporate insiders or the state. The paper provides evidence that all state and privatized firms in transition economies engage in similar types of restructuring, but that product restructuring by firms owned by outsider investors is significantly more effective (in terms of revenue generation) than that by firms with other types of ownership. The paper also examines the impact of managerial turnover on revenue performance, as well as differences among managers of firms with different types of ownership, and concludes that the more entrepreneurial behavior of outsider-owned firms is due primarily to incentive effects, rather than human capital effects, of privatization. More specifically, the authors argue that the success of outsider-owned firms is due to their greater readiness to accept risks (as evidenced by the higher variance of the revenues generated by restructuring) and a lesser need to defend, and account for, their managerial decisions.

SSRN Electronic Journal, 1999

This paper, based on a study of mid-sized firms in the Czech Republic, Hungary, and Poland, seeks... more This paper, based on a study of mid-sized firms in the Czech Republic, Hungary, and Poland, seeks to explain the reasons behind the marked impact of ownership on firm performance which has been observed in a number of studies in Eastern Europe and other parts of the world. Focusing in particular on the differential impact of ownership on revenue and cost performance, the paper argues that privatized firms controlled by outside investors are more entrepreneurial than those controlled by corporate insiders or the state. The paper provides evidence that all state and privatized firms in transition economies engage in similar types of restructuring, but that product restructuring by firms owned by outsider investors is significantly more effective (in terms of revenue generation) than that by firms with other types of ownership. The paper also examines the impact of managerial turnover on revenue performance, as well as differences among managers of firms with different types of ownership, and concludes that the more entrepreneurial behavior of outsider-owned firms is due primarily to incentive effects, rather than human capital effects, of privatization. More specifically, the authors argue that the success of outsider-owned firms is due to their greater readiness to accept risks (as evidenced by the higher variance of the revenues generated by restructuring) and a lesser need to defend, and account for, their managerial decisions.

Quarterly Journal of Economics, 1999

This paper compares the performance of privatized and state firms in the transition economies of ... more This paper compares the performance of privatized and state firms in the transition economies of Central Europe, while controlling for various forms of selection bias. It argues that privatization has different effects depending on the types of owners to whom it gives control. In ...

European Economic Review, 1996

Mass privatization programs attempt to effect a global transformation of the economic and politic... more Mass privatization programs attempt to effect a global transformation of the economic and political environment. Since specific designs of such programs are shaped by the necessity to generate ex ante political support for a massive ownership transformation, they may result in allocating control rights to agents who have incentives to oppose, rather than to effect, reallocation of resources within and across firms. Exemplifying this political exigency of the reform process, the Russian mass privatization program gave to enterprise insiders majority ownership in as many as 70% of Russian companies. The largest outside owners to emerge in the overwhelming majority of the companies in the insider-dominated Russian economy were the ‘voucher privatization funds’.In this paper we attempt to shed some light on the corporate governance role and strategies of this group of outside investors. We focus on two particular strategies of funds' activities: shareholder activism (‘voice’) and trading (‘exit’), each of which has different costs and benefits in postcommunist transition economies than in advanced market systems. The econometric analysis is based on data collected in an empirical survey of 148 voucher investment funds in 28 different regions of Russia. The funds surveyed held stakes in 4,000 to 5,000 privatized companies, thus offering a genuine ‘window’ on the world of Russian firms and their new institutional shareholders.

... Privatization in Eastern Europe: Is the state withering away? Post a Comment. CONTRIBUTORS: A... more ... Privatization in Eastern Europe: Is the state withering away? Post a Comment. CONTRIBUTORS: Author: Frydman, Roman (b. 1948, d. ----. Author: Rapaczynski, Andrzej (b. 1947, d. ----. PUBLISHER: Central European University Press (Budapest and New York and New York). ...

Economics of Transition, 1993

To understand the process of privatization in Eastern Europe it is critical to appreciate its spe... more To understand the process of privatization in Eastern Europe it is critical to appreciate its special significance in the historical context in which it is played out. Unlike in the West, where providing revenues for the state budget was of paramount significance, ...

Economics of Transition, 2000

This paper argues that the imposition of financial discipline is not sufficient to remedy ownersh... more This paper argues that the imposition of financial discipline is not sufficient to remedy ownership and governance-related deficiencies of corporate performance. Using evidence from the postcommunist transition economies, the paper shows that a policy of hard budget constraints falters when state firms, because of inferior revenue performance and lesser willingness to meet payment obligations, continue to pose higher credit risk than privatized firms. The brunt of state firms' lower creditworthiness falls on state creditors. But the "softness" of these creditors is unavoidable if it prevents a demise of firms that are in principle capable of successful restructuring through ownership changes.

SSRN Electronic Journal, 2000

This paper argues that the imposition of financial discipline is not sufficient to remedy ownersh... more This paper argues that the imposition of financial discipline is not sufficient to remedy ownership and governance-related deficiencies of corporate performance. Using evidence from the postcommunist transition economies, the paper shows that a policy of hard budget constraints falters when state firms, because of inferior revenue performance and lesser willingness to meet payment obligations, continue to pose higher credit risk than privatized firms. The brunt of state firms' lower creditworthiness falls on state creditors. But the "softness" of these creditors is unavoidable if it prevents a demise of firms that are in principle capable of successful restructuring through ownership changes.

SSRN-Investing in Insider-Dominated Firms: A Study of Russian Voucher Privatization Funds by Roma... more SSRN-Investing in Insider-Dominated Firms: A Study of Russian Voucher Privatization Funds by Roman Frydman, Katharina Pistor, Andrzej Rapaczynski. ...

Economics of Transition, 1993

* Department of Economics New York University New York NY 10003 Tel:+(1)212-998 8967 ... ** Depar... more * Department of Economics New York University New York NY 10003 Tel:+(1)212-998 8967 ... ** Department of Economics Columbia University New York NY 10027 Tel:+(1)412-854 2060 ... That enterprises are operated in the interests of the owners, approximately at any rate, ...

Economics of Transition, 1995

1 The authors are grateful to the CEU Foundation, the Open Society Institute and the World Bank f... more 1 The authors are grateful to the CEU Foundation, the Open Society Institute and the World Bank for supporting research on this paper. CV Starr Center for Applied Economics at New York University has provided additional support for Roman Frydman's research. None of these institution ...

SSRN-Investing in Insider-Dominated Firms: A Study of Russian Voucher Privatization Funds by Roma... more SSRN-Investing in Insider-Dominated Firms: A Study of Russian Voucher Privatization Funds by Roman Frydman, Katharina Pistor, Andrzej Rapaczynski. ...

Economics of Transition, 1993

* Department of Economics New York University New York NY 10003 Tel:+(1)212-998 8967 ... ** Depar... more * Department of Economics New York University New York NY 10003 Tel:+(1)212-998 8967 ... ** Department of Economics Columbia University New York NY 10027 Tel:+(1)412-854 2060 ... That enterprises are operated in the interests of the owners, approximately at any rate, ...

Economics of Transition, 1995

1 The authors are grateful to the CEU Foundation, the Open Society Institute and the World Bank f... more 1 The authors are grateful to the CEU Foundation, the Open Society Institute and the World Bank for supporting research on this paper. CV Starr Center for Applied Economics at New York University has provided additional support for Roman Frydman's research. None of these institution ...

This paper, based on a study of mid-sized firms in the Czech Republic, Hungary, and Poland, seeks... more This paper, based on a study of mid-sized firms in the Czech Republic, Hungary, and Poland, seeks to explain the reasons behind the marked impact of ownership on firm performance which has been observed in a number of studies in Eastern Europe and other parts of the world. Focusing in particular on the differential impact of ownership on revenue and cost performance, the paper argues that privatized firms controlled by outside investors are more entrepreneurial than those controlled by corporate insiders or the state. The paper provides evidence that all state and privatized firms in transition economies engage in similar types of restructuring, but that product restructuring by firms owned by outsider investors is significantly more effective (in terms of revenue generation) than that by firms with other types of ownership. The paper also examines the impact of managerial turnover on revenue performance, as well as differences among managers of firms with different types of ownership, and concludes that the more entrepreneurial behavior of outsider-owned firms is due primarily to incentive effects, rather than human capital effects, of privatization. More specifically, the authors argue that the success of outsider-owned firms is due to their greater readiness to accept risks (as evidenced by the higher variance of the revenues generated by restructuring) and a lesser need to defend, and account for, their managerial decisions.

SSRN Electronic Journal, 1999

This paper, based on a study of mid-sized firms in the Czech Republic, Hungary, and Poland, seeks... more This paper, based on a study of mid-sized firms in the Czech Republic, Hungary, and Poland, seeks to explain the reasons behind the marked impact of ownership on firm performance which has been observed in a number of studies in Eastern Europe and other parts of the world. Focusing in particular on the differential impact of ownership on revenue and cost performance, the paper argues that privatized firms controlled by outside investors are more entrepreneurial than those controlled by corporate insiders or the state. The paper provides evidence that all state and privatized firms in transition economies engage in similar types of restructuring, but that product restructuring by firms owned by outsider investors is significantly more effective (in terms of revenue generation) than that by firms with other types of ownership. The paper also examines the impact of managerial turnover on revenue performance, as well as differences among managers of firms with different types of ownership, and concludes that the more entrepreneurial behavior of outsider-owned firms is due primarily to incentive effects, rather than human capital effects, of privatization. More specifically, the authors argue that the success of outsider-owned firms is due to their greater readiness to accept risks (as evidenced by the higher variance of the revenues generated by restructuring) and a lesser need to defend, and account for, their managerial decisions.

Quarterly Journal of Economics, 1999

This paper compares the performance of privatized and state firms in the transition economies of ... more This paper compares the performance of privatized and state firms in the transition economies of Central Europe, while controlling for various forms of selection bias. It argues that privatization has different effects depending on the types of owners to whom it gives control. In ...

European Economic Review, 1996

Mass privatization programs attempt to effect a global transformation of the economic and politic... more Mass privatization programs attempt to effect a global transformation of the economic and political environment. Since specific designs of such programs are shaped by the necessity to generate ex ante political support for a massive ownership transformation, they may result in allocating control rights to agents who have incentives to oppose, rather than to effect, reallocation of resources within and across firms. Exemplifying this political exigency of the reform process, the Russian mass privatization program gave to enterprise insiders majority ownership in as many as 70% of Russian companies. The largest outside owners to emerge in the overwhelming majority of the companies in the insider-dominated Russian economy were the ‘voucher privatization funds’.In this paper we attempt to shed some light on the corporate governance role and strategies of this group of outside investors. We focus on two particular strategies of funds' activities: shareholder activism (‘voice’) and trading (‘exit’), each of which has different costs and benefits in postcommunist transition economies than in advanced market systems. The econometric analysis is based on data collected in an empirical survey of 148 voucher investment funds in 28 different regions of Russia. The funds surveyed held stakes in 4,000 to 5,000 privatized companies, thus offering a genuine ‘window’ on the world of Russian firms and their new institutional shareholders.

... Privatization in Eastern Europe: Is the state withering away? Post a Comment. CONTRIBUTORS: A... more ... Privatization in Eastern Europe: Is the state withering away? Post a Comment. CONTRIBUTORS: Author: Frydman, Roman (b. 1948, d. ----. Author: Rapaczynski, Andrzej (b. 1947, d. ----. PUBLISHER: Central European University Press (Budapest and New York and New York). ...

Economics of Transition, 1993

To understand the process of privatization in Eastern Europe it is critical to appreciate its spe... more To understand the process of privatization in Eastern Europe it is critical to appreciate its special significance in the historical context in which it is played out. Unlike in the West, where providing revenues for the state budget was of paramount significance, ...

Economics of Transition, 2000

This paper argues that the imposition of financial discipline is not sufficient to remedy ownersh... more This paper argues that the imposition of financial discipline is not sufficient to remedy ownership and governance-related deficiencies of corporate performance. Using evidence from the postcommunist transition economies, the paper shows that a policy of hard budget constraints falters when state firms, because of inferior revenue performance and lesser willingness to meet payment obligations, continue to pose higher credit risk than privatized firms. The brunt of state firms' lower creditworthiness falls on state creditors. But the "softness" of these creditors is unavoidable if it prevents a demise of firms that are in principle capable of successful restructuring through ownership changes.

SSRN Electronic Journal, 2000

This paper argues that the imposition of financial discipline is not sufficient to remedy ownersh... more This paper argues that the imposition of financial discipline is not sufficient to remedy ownership and governance-related deficiencies of corporate performance. Using evidence from the postcommunist transition economies, the paper shows that a policy of hard budget constraints falters when state firms, because of inferior revenue performance and lesser willingness to meet payment obligations, continue to pose higher credit risk than privatized firms. The brunt of state firms' lower creditworthiness falls on state creditors. But the "softness" of these creditors is unavoidable if it prevents a demise of firms that are in principle capable of successful restructuring through ownership changes.

SSRN-Investing in Insider-Dominated Firms: A Study of Russian Voucher Privatization Funds by Roma... more SSRN-Investing in Insider-Dominated Firms: A Study of Russian Voucher Privatization Funds by Roman Frydman, Katharina Pistor, Andrzej Rapaczynski. ...

Economics of Transition, 1993

* Department of Economics New York University New York NY 10003 Tel:+(1)212-998 8967 ... ** Depar... more * Department of Economics New York University New York NY 10003 Tel:+(1)212-998 8967 ... ** Department of Economics Columbia University New York NY 10027 Tel:+(1)412-854 2060 ... That enterprises are operated in the interests of the owners, approximately at any rate, ...

Economics of Transition, 1995

1 The authors are grateful to the CEU Foundation, the Open Society Institute and the World Bank f... more 1 The authors are grateful to the CEU Foundation, the Open Society Institute and the World Bank for supporting research on this paper. CV Starr Center for Applied Economics at New York University has provided additional support for Roman Frydman's research. None of these institution ...