The Determinants of Privatized Enterprise Performance in Russia (original) (raw)
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The determinants of privatised enterprise performance in Russia
2001
Using data from a large enterprise-level panel designed to address this issue, we account for enterprise performance in Russia. We link performance to four aspects of the economic environment: enterprise ownership; corporate governance; market structures and competition; and financial constraints. We conclude that private ownership and improved performance are not correlated, though restructuring is positively associated with the competitiveness of the market environment. These findings on private ownership support those of previous studies, e.g. Earle and Estrin (1997). Moreover, we find evidence that financially unconstrained firms are better in their undertaking of restructuring measures then financially constrained firms. Further analysis suggests that causality runs from restructuring to financial constraint, rather than the reverse. Finally, our findings indicate strong complementarities between the four factors influencing improved company performance, confirming the view that these factors need to be considered jointly.
Global Finance Journal, 2007
Using a sample of 161 firms (privatized from 1961 to 1999), our study offers evidence of how restructurings and corporate governance changes affect the firm's post-privatization performance. Prior to privatization, governments may choose to restructure firms through governance changes (i.e., establish relation with strategic foreign investors, implement employee share ownership plans) and/or restructurings (i.e., acquisitions, divestitures, re-capitalizations). We first extend existing privatization research by documenting and describing these restructurings. We then conduct preliminary tests to examine whether such restructurings/governance changes have affected post-privatization operating performance. Our results suggest that both restructuring and changes in corporate governance are important determinants of postprivatization performance.
SSRN Electronic Journal, 2000
While there is now ample empirical evidence that privatization improves the performance of divested firms, to date there has been very little study of why these performance improvements occur. We use a sample of 118 firms (from 29 countries and 28 industries), privatized via public share offering between 1961 and 1995, to address this important issue. We first contribute to the existing empirical literature by documenting significant increases in profitability, efficiency, output, and capital expenditure, and significant decreases in leverage following privatization. Unlike other large-sample empirical studies of share-issue privatization, we then study the determinants of these performance improvements. Our data provide evidence of stronger profitability gains for firms with lower employee ownership and higher state ownership, stronger output gains for firms in competitive industries and for firms in countries with faster growing economies. Stronger efficiency gains are observed when foreign ownership is high, for firms that restructure, for firms in developing nations, and when the share offer size is relatively small compared to total national market capitalization. We find that higher levels of employee ownership are associated with greater increases in capital expenditure after privatization. Finally, our results indicate that leverage increases more for firms with higher foreign ownership, those located in developing economies and those in countries with rapidly growing economies.
Ownership, Control and Corporate Performance After Large-Scale Privatization
SSRN Electronic Journal, 2000
We analyze the effects of ownership type and concentration on performance of a population of firms in a model large-scale privatization economy (Czech Republic). Using specifications based on first-differences and unique instrumental variables, we find that few types of private ownership improve dynamic post-privatization performance. Concentrated foreign (but not domestic) ownership improves some measures of performance relative to state ownership. Foreign investors engage in strategic restructuring by increasing the rate of change of sales, while domestic private owners reduce the rate of change of sales and labor cost without increasing profitability. The effects of concentrated foreign ownership support the agency theory and go against theories stressing the positive effects of managerial autonomy and initiative. Our results are also consistent with the thesis that large domestic stockholders are not improving performance because they loot the firms. We find some support for the hypothesis that firms restructure by first lowering and later increasing the rate of change of employment. The state as a holder of the golden share has a positive effect on employment, while stimulating profitable restructuring. The state hence appears as a more economically and socially helping agent than in some recent studies.
Post-privatization enterprise restructuring
2000
Post-privatization restructuring of former state-owned enterprises (FSOEs) encompasses both shorter-run "defensive" actions and longer-run "strategic" measures. Restructuring involves changes in corporate governance, organizational structure, management, labor, capital, technology, output, and sales. Various performance indicators may measure the results of restructuring, but care is required in the selection and interpretation of indicators. In the restructuring of FSOEs foreign strategic investors have many advantages over domestic investors. The study includes examples from experience in the Czech Republic, Hungary, and Poland.
World Development, 2004
While it is well documented that privatization leads to an improvement in the performance of state-owned enterprises (SOEs) following divestiture, many of these studies do not consider the performance of control firms in similar pre-privatization situations. The purpose of this paper is to examine the performance of 54 newly privatized Egyptian firms against a matching number of SOEs. By matching sample firms (privatized) with control firms (SOEs) over 1994-98, our analyses show that privatized firms do not exhibit significant improvement in their performance changes relative to SOEs. These findings question the benefits of Egyptian privatization. Nevertheless, evidence from this study could be interpreted to mean that privatization improved the performance of privatized firms, which, in turn, may have had important spillover effects on SOEs. A study over a longer period is needed before these results can be considered conclusive.
Enterprise restructuring in Belarus
2006
We explore the impact of privatization and the entry of new firms on enterprise performance in Belarus, a transition economy in which reform and market-orientated institutional development has been limited. We hypothesize that private ownership will enhance company performance, measured in a variety of ways including profitability and capacity to export to the West, and that newly created firms will perform better than state-owned ones. Our work is based on a large enterprise level survey which includes state-owned firms, privatized companies and newly created enterprises. The data refute both hypotheses. We conclude that this is probably because the institutional environment has not evolved sufficiently from the socialist era to permit free competition and effective governance by new owners. JEL Classification: P2, P31, L1