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Choice of Ownership Structure and Firm Performance: Evidence from Estonia

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  • Derek Jones
  • Panu Kalmi
  • Niels Mygind

Abstract

This article uses panel data for a representative sample of Estonian enterprises to analyse diverse issues related to the determinants of ownership structures and ownership changes after privatisation. A key focus is to determine whether ownership changes are related to economic efficiency. While employee-owned firms are found to be much more prone than other firms to switch ownership categories, often 'employee-owned' firms remain 'insider-owned' as ownership passes from current employees to managers and former employees. Logit analysis of the determinants of ownership structures and ownership changes provides mixed support for several hypotheses. As predicted: (i) wealth and resource constraints play a crucial role in the determination of ownership, with foreigners buying firms with the highest equity levels and insiders buying firms with the lowest equity valuations; (ii) risk aversion explains subsequent ownership changes, especially away from employee ownership; (iii) allocation of ownership depends on the pre-privatisation origin and location of the firm, and these factors also influence subsequent ownership changes. Our findings provide mixed support for the hypothesis that ownership changes are related to economic efficiency.

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  • Derek Jones & Panu Kalmi & Niels Mygind, 2005. "Choice of Ownership Structure and Firm Performance: Evidence from Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 83-107.
    • Handle: RePEc:taf:pocoec:v:17:y:2005:i:1:p:83-107
    DOI: 10.1080/14631370500052779
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    Cited by:

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    4. Gianni De Fraja & Barbara M. Roberts, 2009. "Privatization in Poland What was the government trying to achieve?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(3), pages 531-557, July.
    5. Derek C. Jones & Panu Kalmi, 2009. "Trust, Inequality And The Size Of The Co‐Operative Sector: Cross‐Country Evidence," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(2), pages 165-195, June.
    6. Irena Grosfeld & Iraj Hashi, 2004. "The emergence of large shareholders in mass privatized firms: Evidence from Poland and the Czech Republic," William Davidson Institute Working Papers Series 2004-718, William Davidson Institute at the University of Michigan.
    7. Curtiss, Jarmila & Ratinger, Tomáš & Medonos, Tomáš, 2012. "Ownership and Investment Behaviour in Transition Countries: A Case Study of Collective and Corporate Farms in the Czech Republic," Factor Markets Working Papers 121, Centre for European Policy Studies.
    8. Bernd Gorzig & Martin Gornig & Ramona Voshage & Axel Werwatz, 2010. "Eastern Germany on the brink of closing the productivity gap? Firm level evidence from manufacturing," Post-Communist Economies, Taylor & Francis Journals, vol. 22(4), pages 499-511.
    9. Curtiss, Jarmila & Medonos, Tomas & Ratinger, Tomas, 2005. "Ownership Form Effect on Large-Scale Farms' Performance: Case of Czech Agriculture," 94th Seminar, April 9-10, 2005, Ashford, UK 24435, European Association of Agricultural Economists.

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    More about this item

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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