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The Impact of Czech Privatisation Methods on Enterprise Performance Incorporating Initial Selection Bias Correction

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  • A. Marcincin
  • S. van Wijnbergen
Abstract
Governments with transitional economies have applied different privatisation methods, from an almost free distribution to the direct sales of state assets. While a free distribution was believed to ensure the political feasibility of the program and its fairness, direct sales, or more generally, standard privatisation methods had a significant advantage in creating concentrated ownership structures as the prerequisite to corporate control and restructuring. Many economists believe that the two goals of mass privatisation, political feasibility and creation of proper ownership incentives, contradict each other and recent empirical comparisons of enterprises seem to support their view. However, all empirical works have been based on the weak assumption that privatisation methods were applied on a randomly selected samples of enterprises, which then allowed for a direct comparison between these enterprises. Our main claim is that governments indeed selected enterprises non-randomly and therefore, the resulting selection bias must be incorporated into the analyses. To show this, we apply a Heckman two-step regression method on a sample of 559 Czech enterprises. The main point of this paper then is that performance is influenced by the selection process and combination of vouchers with outsider owners is preferred over 100% voucherisation.

Suggested Citation

  • A. Marcincin & S. van Wijnbergen, 1997. "The Impact of Czech Privatisation Methods on Enterprise Performance Incorporating Initial Selection Bias Correction," CERT Discussion Papers 9704, Centre for Economic Reform and Transformation, Heriot Watt University.
    • Handle: RePEc:hwe:certdp:9704
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    References listed on IDEAS

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    Cited by:

    1. Marko Simoneti & Joze P. Damijan & Boris Majcen & Matija Rojec, 2002. "Performance after mass privatisation : the case of Slovenia," UCL SSEES Economics and Business working paper series 10, UCL School of Slavonic and East European Studies (SSEES).
    2. Claessens, Stijn & Djankov, Simeon, 1999. "Ownership Concentration and Corporate Performance in the Czech Republic," Journal of Comparative Economics, Elsevier, vol. 27(3), pages 498-513, September.
    3. Elisa Galeotti & Eva Ryšavá, 2008. "The endogeneity problem and fdi in transition: evidence from the privatized glass sector in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2008(4), pages 319-339.
    4. Sweder J. G. van Wijnbergen & Tim Willems, 2016. "Learning Dynamics and Support for Economic Reforms: Why Good News Can Be Bad," The World Bank Economic Review, World Bank, vol. 30(1), pages 1-23.
    5. repec:lic:licosd:14304 is not listed on IDEAS
    6. Sergei Guriev & Barry W. Ickes, 2000. "Microeconomic Aspects of Economic Growth in Eastern Europe and the Former Soviet Union, 1950-2000," William Davidson Institute Working Papers Series 348, William Davidson Institute at the University of Michigan.
    7. Anderson, James H. & Korsun, Georges & Murrell, Peter, 2003. "Glamour and value in the land of Chingis Khan," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 34-57, March.
    8. Barbara Blaszczyk & Iraj Hashi & Alexander Radygin & Richard Woodward, 2003. "Corporate Governance and Ownership Structure in the Transition: The Current State of Knowledge and Where to Go from Here," CASE Network Studies and Analyses 0264, CASE-Center for Social and Economic Research.
    9. Simoneti, Marko & Damijan, Joze P. & Rojec, Matija & Majcen, Boris, 2005. "Case-by-Case Versus mass privatization in transition economies: Initial owner and final seller effects on performance of firms in Slovenia," World Development, Elsevier, vol. 33(10), pages 1603-1625, October.
    10. Katarzyna Mikolajczyk & Barbara M. Roberts, 2006. "Who Gets Privatised? An Empirical Analysis Of Polish Manufacturing," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(3), pages 369-384, September.
    11. Henry Ohlsson, 2003. "Ownership and Production Costs: Choosing between Public Production and Contracting-Out in the Case of Swedish Refuse Collection," Fiscal Studies, Institute for Fiscal Studies, vol. 24(4), pages 451-476, December.
    12. Jana Fidrmucova, 2000. "Channels of Restructuring in Privatized Czech Companies," Econometric Society World Congress 2000 Contributed Papers 1358, Econometric Society.
    13. Richard B. Goud Jr., 2002. "Ownership and Firm Performance: Evidence from 25 Countries in Central and Eastern Europe and the Former Soviet Union," Development and Comp Systems 0207002, University Library of Munich, Germany.
    14. Marc Duponcel, 1998. "Restructuring of food industries in the five Central and Eastern European front-runners towards EU membership (CEEC-5). A comparative review," CERT Discussion Papers 9806, Centre for Economic Reform and Transformation, Heriot Watt University.

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