Ownership Structure as a Determinant of Firm Value: Evidence from Newly Privatized Czech Firms

Using a sample of 988 newly privatized Czech firms, with part of the ownership structure exogenously determined prior to voucher privatization, we find that share values are positively related with the ownership stakes of foreigners, insiders, and restituents. While the findings for foreigners and insiders can be attributed to their superior ability to identify more profitable firms, we interpret the findings on restituents as evidence of the beneficial effect of blockholdings. On the other hand, we find that the ownership of the fund with the largest stake is not significantly related with share value, suggesting that the value of external blocks depends on the identity of the owner. However, when the fund is also the largest blockholder in the firm, it has an adverse effect on share value. The negative effect of the dominant block owned by a fund is mitigated when a bank sponsors the fund. Although funds are legally separated from their sponsoring institutions, bank‐sponsored funds may nevertheless have inherited a better access to the innards of these firms, and may be in a better position to monitor them.     

From federalism, Chinese style to privatization, Chinese style

In 1995, China began a profound reform of its state-owned enterprises. We first describe and characterize this progress in two areas: privatization of small state-owned enterprises at the county level and mass lay-offs of excess state workers at the city level. Local governments have initiated these reforms, which are proceeding in economically and politically sensible ways. We then argue that privatization, Chinese style, rests on an adequate economic and political foundation - federalism, Chinese style. We suggest a range of incentives that propel local governments toward state-owned enterprise reform, including their harder budget constraints and increased competition from the non-state sector. In this sense, federalism, Chinese style, has induced privatization, Chinese style.
JEL classification: H7, L30, P3.     

Privatization and the economic performance of Irish Sugar/Greencore

As one of Ireland’s largest agribusiness companies, the Irish Sugar company played a key role in the country’s economic development in the twentieth century. The company was privatized in 1991 (under the new name Greencore) and has since transformed from a largely commodity-based agribusiness into an international convenience food company. This article analyses the financial and economic performance of the company in the 10 years before and after privatization. It finds that the change from public to private ownership was not strongly associated with improved financial performance and productivity as the company had experienced rapid growth and improvement in the pre-privatization period. These findings run counter to perspectives such as public choice theory that suggest a positive relationship between privatization and company performance. Performance in the post-privatization period was strongly influenced by greater exposure to market forces in the company’s expanding food division; however, it is surprising that this greater competition did not translate into improved overall performance.     

Reversal in the relative performance of state- and legal person-owned companies during the Chinese split share structure reform

The split share structure reform was started in 2005 with the object of re-designating state-related, nontradable shares into tradable shares. The article compares the two major forms of state ownership in China (direct or indirect ownership) showing that, close to the reform period, companies directly held by the state experience a significant increase in market performance relative to indirectly held companies. Results suggest that investors’ perception about the worth of these two forms of state ownership may have suffered a reversal, thus bringing to light value-related consequences ensuing from protective schemes usual in China and elsewhere. The article also addresses a recurrent pitfall relating to the use in empirical models of fractions of the same total and shows that U-shaped patterns found in the relationship between ownership and performance are transient rather than stable.     

The learning path of the hidden economy: the tax burden and tax evasion in New Zealand

This paper considers the ‘learning curve’ relationship between the aggregate tax rate and the relative size of the hidden economy in New Zealand. Some simple non-linear models are estimated so that the effects of changes in the effective tax rate on the underground economy can be simulated. This study finds that about half of the hidden activity in New Zealand is a learned response to changing opportunities and constraints in fiscal policy, but this amount varies over the business cycle. Simulating a zero tax rate permits us to discover the ‘natural rate’ of underground and criminal activity. Some partial lessons are drawn for taxation policy in that country.     

西方国家行政改革实践及发展模式探究

西方国家的行政改革实践始于20世纪70年代末,改革基本上围绕着私有化、缩减政府规模、削减公共开支、转变政府职能等目标展开,所采取的具体措施也基本以绩效控制、私有化、政府再造和公共服务市场化等手段为主。结合西方国家行政改革的实践经验和未来发展模式,可将西方行政改革的模式归纳为四种:市场式政府模式、参与式政府模式、弹性化政府模式和解制型政府模式。     

Ownership structure,monitoring, and market value of companies: evidence from an unusual privatization mode

This study analyses the impact of ownership structure and market liquidity on company value. We investigate different aspects of ownership: the risk of political interference, private investors vs. the state acting as influential blockholders, and preferential political treatment of companies. Using a unique dataset of Polish partial privatizations initiated by shares transfers to entities under limited government influence, we find that government divestments can enhance company value, due to reduction in risk of political interference. A potential increase in the liquidity of trades in transferred companies’ shares also boosts their market value. On the other hand, an increased likelihood of the emergence of private blockholders able to expropriate minority shareholders reduces the firm’s market value. Our results support the political view of privatization: governments have objectives different to profit maximization, which leads to suboptimal investment from this point of view and lower market value of companies. We also develop a model to empirically distinguish between different aspects of ownership on company value.     

Legal Technologies of Primitive Accumulation: Judicial Robbery and Dispossession‐by‐Restitution in Warsaw

Among the ‘extra‐economic means’ that facilitate primitive accumulation, or accumulation by dispossession, the law plays a prominent role. But works on neoliberal urban restructuring rarely engage with concrete legal technologies. Analysing judicial property restitution (‘reprivatization’) in Warsaw, this article grasps the machine of accumulation by dispossession at a moment of faltering and exposes the distinctive legal technologies behind its troubleshooting. It makes three contributions to critical urban studies. First, it demonstrates how judicial systems can steal political conflicts that obstruct the cycle of accumulation by dispossession. It thus introduces the notion of ‘judicial robbery’, a non‐legislated expropriation of common property through judicial engineering that simultaneously deprives the public of political agency. Second, it shows that seemingly neutral legal technicalities, usually sheltered from political debate, can become a key locus of urban politics. Third, it examines the agency, scope and spatial patterns of ‘dispossession by restitution’, the term I use for a locally specific form of accumulation by dispossession in Warsaw. Lastly, I raise the question of political struggle against primitive accumulation. Is the judicial robbery reversible? If we can reclaim property, can we also reclaim political conflicts that have been stolen by the law?     

Buy-outs in Hungary,Poland and Russia: governance and finance issues1

The governments of Hungary, Poland and Russia have used buy-outs as an important privatization strategy which can be viewed as forming a continuum from straightforward sales where management and employees generally achieve significant ownership, as in Hungary, via intermediate approaches as in Poland where both payment and free distribution of shares are involved, to the Russian case where state-owned enterprises were effectively “given away” through a voucher privatization scheme. This paper, first, presents preliminary evidence on the extent and nature of post-privatization restructuring in buy-outs in these three countries, which highlights the transitory nature of this form of organization. Second, in the light of these findings, the paper analyses the possibilities and difficulties associated with enhancing corporate governance and finance.