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Corporate governance following mass privatization

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  • Brada, Josef C.

Abstract

Using vouchers to privatize state-owned firms was an innovative but controversial aspect of transition. In the Czech Republic, voucher privatization created a large group of minority shareholders who coexisted with large shareholder–managers who controlled firms. Critics allege that the structure of shareholdings and regulatory failures allowed pervasive theft of corporate assets, much of it financed by irresponsible bank lending, and led to a financial crisis and an economic downturn. I argue that neither anecdotal evidence of managerial malfeasance nor the theories of tunneling and looting provide strong evidence for this view of corporate governance in the Czech Republic. A lack of small shareholder protection seems to have imposed small costs on the economy, and it may have facilitated rather than hampered the restructuring of firms.

Suggested Citation

  • Brada, Josef C., 2016. "Corporate governance following mass privatization," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 1132-1144.
  • Handle: RePEc:eee:jcecon:v:44:y:2016:i:4:p:1132-1144
    DOI: 10.1016/j.jce.2016.10.003
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    Cited by:

    1. Kim, Guest Editors Byung-Yeon & Kutan, Ali M., 2016. "Economic agents in transition: Firm owners and households," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 1084-1085.
    2. Josef C. Brada & Ichiro Iwasaki, 2023. "Do target-country legal institutions affect cross-border mergers and acquisitions? A quantitative literature survey," European Journal of Law and Economics, Springer, vol. 55(2), pages 225-289, April.

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    More about this item

    Keywords

    Corporate restructuring; Privatization; Corporate governance; Tunneling; Looting; Czech republic;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal

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