Post-privatization corporate governance and firm performance: The role of private ownership concentration,identity and board composition

We examine and analyze the post-privatization corporate governance of a sample of 52 newly privatized Egyptian firms over a period of 10 years, from 1995 to 2005. We look at the ownership structure that results from privatization and its evolution; the determinants of private ownership concentration; and the impact of private ownership concentration, identity and board composition on firm performance. We find that the state gives up control over time to the private sector, but still controls, on average, more than 35% of these firms. We also document a trend in private ownership concentration over time, mostly to the benefit of foreign investors. Firm size, sales growth, industry affiliation, and timing and method of privatization seem to play a key role in determining private ownership concentration. Ownership concentration and ownership identity, in particular foreign investors, prove to have a positive impact on firm performance, while employee ownership concentration has a negative one. The higher proportion of outside directors and the change in the board composition following privatization have a positive effect on firm performance. These results could have some important policy implications where private ownership by foreign investors seems to add more value to firms, while selling state-owned enterprises (SOEs) to employees is not recommended. Also, the state is highly advised to relinquish control and allow for changes in the board of directors following privatization as changing ownership, per se, might not have a positive impact on firm performance unless it is coupled with a new management style.     

Endogenous timing game in a mixed duopoly with partial foreign ownership and asymmetric increasing marginal costs

This study examines a timing game in a mixed duopoly wherein public and private firms compete by taking account of the increasing marginal cost of both firms, as well as partial foreign ownership of the private firm. This study finds that if the private firm has a strong cost advantage over the public firm, public leadership is a risk dominant equilibrium irrespective of foreign ownership ratio. This result means that the cost difference between the public and private firms matters in selecting the risk-dominant equilibrium of the timing game. Additionally, if the private firm has only a weak cost advantage over the public firm, then private leadership (public leadership) is the risk dominant equilibrium if the foreign ownership ratio is (not) small.     

Evolving corporate governance and the dividends behaviour regime in Japan

This study investigates empirically the implications which the changing ownership structure and control transfers in the Japanese corporate market may have for the dividend policy of listed firms. The results show that firms with more concentrated ownership may distribute fewer dividends, as ownership concentration reduces distribution pressure from the capital market. Moreover, we show that institutional shareholding, both financial and non-financial, enables corporations to pay lesser dividends and also that the unwinding of the cross-shareholdings allows for efficiency gain and provides impetus to pay higher dividends. The recent pattern of increasing individual shareholding, both of domestic and foreign private individuals, is consistently associated with a higher dividend payment. Furthermore, managerial ownership has negative effects on dividends payouts and is not associated with the earnings of firms. The results suggest that government ownership does not have any significant impact on the payment of dividends. Moreover, our results support the principle of the dividends relevancy and the choice of an appropriate dividends policy affects the value of the firm.     

Institutional environment,ownership and firm taxation

This paper examines how ownership type and institutional environment affect firm taxation. Using a sample of Chinese‐listed firms from 1999 to 2006, we find that private firms enjoy a lower effective tax rate than local state‐owned enterprises. In addition, the preferential taxation of private firms is associated with local government incentives to promote local economic growth. We find that private firms located in regions with a lower level of privatization receive preferential tax treatment. Our results also suggest that decentralization and interjurisdictional competition lead to financial interdependence between local governments and private firms.     

Effects of regulatory burden and corruption on firm performance: Evidence from Moldova

Firms in Moldova face a high level of regulatory burden, as proxied by the number of inspections by public authorities. At the same time, they face high levels of corruption. We examine the effect of frequent inspections on four measures of firm performance: labour and total factor productivity, and levels of tangible and intangible assets. We also investigate how corruption affects the relationship between inspections and firm performance. We perform panel data analysis using firm-level administrative data and survey data from Moldova in 2005–2015. The results show that inspections and corruption each affect firm productivity negatively, but corruption moderates the negative effect of inspections. We also find that inspections and intangible assets are positively correlated, but this correlation is weaker for higher levels of corruption. Finally we examine whether these results differ by industry, firm size and ownership types. Inspections and corruption affect medium and large firms, and state-owned enterprises differently from micro and small firms and private firms respectively.     

多元化战略对管理层激励的影响--来自中国资本市场的经验证据

本文利用2001-2004年中国上市公司的数据,使用面板数据模型,对中国上市公司多元化与管理层激励之间的关系进行了检验.结果表明:现金薪酬水平与公司价值负相关,高管人员持股比例与公司价值之间是非线性关系,激励并没有发挥其应有的作用;多元化对公司价值的影响并不显著.当控制了影响多元化的公司内部因素后,我们发现国有股占主导地位的公司,多元化程度与现金薪酬之间是负向关系;多元化程度与管理层持股比例之间是正向关系.多元化程度与在职消费正相关.多元化决策是管理当局希望从多元化中获取更多的剩余收益和隐性的私人利益.     

Firm growth and productivity in Belarus: New empirical evidence from the machine building industry

Using a unique dataset comprising information for (up to) 153 firms in the machine building sector in Belarus, we investigate the determinants of firm growth for an economy where state ownership of enterprises is widespread. We use panel data models based on generalizations of Gibrat’s law, total factor productivity estimates and matching methods to assess the differences in firm growth between private and state-controlled firms. Our results indicate that labor hoarding and soft budget constraints play a particularly important role in explaining differences in performance between these two groups of firms.     

Optimal privatization and uniform subsidy policies: A note

The privatization neutrality theorem states that the share of public ownership in a firm does not affect welfare under an optimal uniform tax‐subsidy policy. We revisit this neutrality result. First, we investigate the case in which the private firm is domestic. We show that this neutrality result does not hold unless public and private firms have the same cost function. Next, we investigate a case in which both domestic and foreign investors own the private firm. We show that the optimal degree of privatization is never zero, and thus, the neutrality result does not hold, even when there is no cost difference between public and private firms.     

The Manager as a Person

Abstract Professor John Roemer has defended a future market socialist order. His model would encompass an egalitarian coupon market for the ownership of firm shares, a private sector for firms below a certain size, a system of public bank loans for the raising of capital, and an industrial policy of differential interest rates for various economic sectors. This paper argues that such a model would generate perverse incentives for firms, shareholders, public officials, and private entrepreneurs. It also argues that Roemer's contention that such a model would produce a more environmentally sensitive polity is problematic.     

Nationalizations,bailouts and efficiency

ABSTRACT

We develop a theoretical model in which there are public and private firms and a government. When firms become insolvent, the government can intervene with bailouts or nationalizations. The government only intervenes when the bankruptcy of a firm entails social costs. In this setting, we analyze how government interventions affect allocative and productive efficiency. Nationalizations of private firms after unprofitable investments lead to increased allocative efficiency despite private ownership. The effort level chosen by the managers and employees working for a firm is also affected by the possibility of government interventions, reducing the productive efficiency advantage of private firms.     

Export rivalry,vertically-related markets,and optimal public ownership policy

This paper considers the optimal public ownership policy of an upstream firm which competes with a foreign private rival. Both firms supply a produced input to the domestic and foreign downstream firms that compete in an export market. The paper shows that complete privatization of the domestic upstream firm is never optimal. It will likely be fully nationalized if its market share is high, the domestic downstream firms' market share is low, and the total number of firms in the downstream is large. Simulation results reveal that the public firm's optimal profit margin may be negative and that the government ownership level may exhibit a reswitching phenomenon as the number of domestic downstream firms keeps growing. The paper sheds light on the possibility of using government ownership policy as a pseudo-trade and industrial policy.     

Post-privatisation ownership concentration: Determinants and influence on firm efficiency

With this study we aim to contribute to the empirical literature on privatisation processes by analysing the determinants of post-divestment private ownership concentration and its possible link to corporate efficiency. For Spanish firms, we find that the method of privatisation, the type of industry, the company’s size and its level of risk may help explain differences in private ownership concentration. We also find, after controlling for endogeneity, that ownership concentrated in the hands of private investors has a positive and significant effect on post-privatisation efficiency.     

Privatization and Management Incentives: Evidence from the United Kingdom

This article examines whether privatization affects managementincentives and provides an estimate of the magnitude of thechange. Using data from large firms in the United Kingdom, wefind no relationship between compensation and financial performancein state-owned firms, both before and after corporate governancereforms. In contrast, we find a strong sensitivity in privatizedfirms both immediately and in more mature privatized firms drivenlargely by stock options and shareholding. For more mature privatizedfirms, compensation and dismissal sensitivities are complementarywith our estimates, suggesting a £443,000 increase inmanagement returns for a one standard deviation improvementin firm performance. This estimated incentive intensity is higherthan in established publicly traded firms. Our results supportthe theoretical focus on incentives in the dominant theoriesof state and private ownership.     

高管持股对创新可持续性的影响研究

企业创新活动一旦中断将会产生巨大的调整成本损失。因此,如何保持企业创新可持续性是企业创新研究的重要问题。结合委托代理理论,探索了企业高管持股对创新可持续性的影响,并进一步讨论了高管过度自信与产权性质的调节作用。使用2003-2014年中国A股制造业上市公司面板数据进行实证分析,结果表明：高管持股对企业创新可持续性具有显著正向影响,高管过度自信则弱化了两者间正向关系,而相对于非民营企业,民营企业高管持股对创新可持续性的正向作用更强。同时考虑两种情境效应的综合影响时,在民营企业中高管过度自信的负向调节作用更强。最后,考虑了遗漏变量带来的“选择偏差问题”和内生性问题,采用基于Kernel匹配得分法的反事实检验,为实证结果提供了稳健性证明。     

Ownership dynamics and firm performance in an emerging economy: a meta-analysis of the Russian literature

This paper provides a meta-analysis of studies on the effect of ownership on the performance of Russian firms over 20 years of rapid institutional and economic changes. We review 29 studies extracted from the EconLit and Web of Science databases with a total of 877 relevant estimates. We find that the government negatively affects company performance regardless of its administrative level. In contrast, private ownership is positively associated with firm performance. However, the effect size and statistical significance are notably varied among different types of private ownership. While the effect of insider (employee and management) ownership is comparable to that of foreign investors, the effect of domestic outsider investors is considerably smaller. Our assessment of publication selection bias reveals that the existing literature does not contain genuine evidence for a series of ownership types and, therefore, some of the findings have certain limitations.     

The merger paradox in a mixed oligopoly

This paper examines the set of surplus maximizing mergers in a model of mixed oligopoly. The presence of a welfare maximizing public firm reduces the set of mergers for which two private firms can profitably merge. When a public firm and private firm merge, the changes in welfare and profit depend on the resulting extent of private ownership in the newly merged firm. When the government sets that share to maximize post merger welfare as assumed in the privatization literature, the merger paradox will often remain and the merger will not take place. Yet, we show there always exists scope for mergers that increase profit and increase (if not maximize) welfare. Interestingly, these mergers often include complete privatization.     

混合所有制公司中的国有股权——论国有股减持的理论基础

本文通过回答以下问题来建立国有股减持的理论基础 :国有股权在混合所有制公司中的作用是什么 ,以及国有股权比重应该如何调整。以截止 1 998年底的中国上市公司为样本 ,我们首次考虑了股权结构内生性可能 ,以及公司上市时 ,政府在决定国有股权比重过程中面临的逆向选择问题 ,即在上市前业绩较差的公司 ,由于其较差的初始业绩导致较低的可流通股发行额度 ,政府不得不保留更多的国有股 ,从而表现为上市前业绩越差 ,上市时国有股权比重越高的反向关系。给定中国上市公司面临的独特制度环境 ,我们有以下发现 :( 1 )公司上市后 ,国有股股东有助于改善公司业绩 ;( 2 )公司上市时 ,政府在决定国有股权比重过程中确实存在着逆向选择问题 ;( 3 )公司上市后 ,国有股权比重内生决定于公司利润最大化过程 ,上市后的业绩越差 ,国有股比例越低。分析结果的政策含义在于 :政府减持国有股不能“一刀切” ,而应以公司业绩为依据 ,首先在上市后业绩较差的公司进行减持。     

Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms

We examine the effect of ownership structure on firm performance, for firms listed on Vietnamese stock exchanges, using 2744 firm‐year observations over the period from 2007 to 2012. We find a non‐linear relationship between ownership structure and firm performance. State ownership has a convex relationship with firm performance. This paper finds that firm performance increases beyond 28.67 percent level of state ownership. Foreign ownership has a concave relationship with firm performance. We find that firm performance increases with an increase of foreign ownership up to a level of 43 percent and then decreases. Policy makers should encourage foreign ownership and widely dispersed state ownership in firms, which can help improve firm performance.     

Lack of commitment to future privatization policies may lead to worst welfare outcome

We investigate the welfare consequences of a lack of commitment to future privatization policies. The government implements a privatization policy after the competition structure is determined by the entry of private firms. We find that in an equilibrium, the government fully privatizes (nationalizes) a public firm if private firms expect that the government fully privatizes (nationalizes) the public firm. This is because an increase in the number of firms entering a market increases the government's incentive to privatize the public firm, which mitigates future competition and stimulates entries. The full-privatization equilibrium is the worst privatization policy among all possible (either equilibrium or non-equilibrium) privatization policies for welfare because it causes excessive market entry of private firms. Partial commitment of a minimal public ownership share may mitigate this problem.     

Love conditionally: The ownership structure and bribery behavior of Chinese firms

This paper studies empirically the determinants of firm bribery activities from the perspective of ownership structure. Using data on Chinese firms obtained from the Enterprise Surveys conducted by the World Bank, we compare the bribery activities of firms with various forms of ownership. We find that compared with private and foreign firms, state‐owned firms in China are not only more likely to receive bribe requests from government officials, but are also more likely to pay bribes. Meanwhile, firms are more likely to bribe if they are extorted, or if they expect to reduce infrastructural obstacles to their business operations. Other factors such as manager experience and external audits also exhibit significant influence upon firms’ bribery decisions.