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Private ownership and corporate performance: evidence from transition economies
The assumption behind privatisation in eastern Europe and elsewhere is that
private ownership improves corporate performance. We focus on comparing the
performance of state firms with either private or privatised firms operating
under reasonably similar conditions in three countries of eastern Europe. We
supplement this comparison by an examination of the relative performance of
privatised and state firms in the period before the former were privatised.
Our empirical results confirm the hypothesis that the effect of ownership
change is particularly pronounced on the revenue side of corporate
performance. In general, we find that firms with outsider owners significantly
outperform the firms with insider owners on most performance measures, and
that the employees are particularly ineffective owners (indeed less effective
than the state).
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