Current Issue
Past Issues
About the Journal
Aims and Scope
Publisher
Editorial Board
Publishing Ethics
Indexing and Archiving
Copyright, Licensing and Access
For Authors
Submission Guidelines
Publication Fees
Peer-review Process
Editorial and Production Processes
Corrections and Retractions
Publishing Ethics
Copyright, Licensing and Access
Contact Us
RESEARCH PAPER
A New Instrument for Measuring the Local Causal Effect of Privatisation on Firm Performance
1
University of Warsaw, Poland
2
CASE - Center of Social and Economic Research, Poland
3
University of Warsaw, Faculty of Management, Poland
4
FAME|GRAPE, Warsaw, Poland
5
IZA - Institute of Labor Economics, Bonn, Germany
Submission date: 2019-11-26
Final revision date: 2020-03-24
Acceptance date: 2020-07-16
Publication date: 2020-09-30
GNPJE 2020;303(3):35-52
KEYWORDS
JEL CLASSIFICATION CODES
ABSTRACT
Despite an apparent consensus in the literature that privatisation universally leads to an increase in firm performance, the problem of endogeneity bias is profound and has been emphasised in a number of meta-analyses. We propose a new instrument to address the endogeneity bias and apply it to Polish medium-sized and large firms in the period of 1995 to 2008. We find that improvements in firm performance are not universal; in particular, we find no improvement among manufacturing firms privatised to domestic investors.
FUNDING
The support of Narodowe Centrum Nauki (grant no: 2014/13/B/HS4/03260) is gratefully acknowledged.
REFERENCES (52)
1.
Anderson J. H., Lee Y., Murrell P. [2000], Competition and privatization amidst weak institutions: evidence from Mongolia. Economic Inquiry, 38: 527–549.
2.
Anderson R. E., Claessens, S. Djankov, S. Pohl, G. [1997], Privatization Effects in Central and Eastern Europe, MOCT-MOST: Economic Policy in Transitional Economies, 7: 137–162.
3.
Angrist J. D., Krueger A. B. [2001], Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments, Journal of Economic Perspectives, 15: 69–85.
4.
Barberis N., Boycko M., Shleifer A., Tsukanova N. [1996], How does privatization work? Evidence from the Russian shops, Journal of Political Economy, 104: 764–790.
5.
Biais B., Perotti E. [2002], Machiavellian privatization, The American Economic Review, 92: 240–258.
6.
Boockmann B., Thomsen S. L., Walter T. [2012], Intensifying the Use of Benefit Sanctions: An Effective Tool to Shorten Welfare Receipt and Speed Up Transitions to Employment?, ZEW Discussion Papers, 09–072 (updated version). ZEW.
7.
Bortolotti B., Fantini M., Siniscalco D. [2004], Privatisation around the world: Evidence from panel data. Journal of Comparative Economics, 88: 305–32.
8.
Boubakri N., Cosset J. C., Guedhami O., Saffar W. [2011], The political economy of residual state ownership in privatized firms: Evidence from emerging markets, Journal of Corporate Finance, 17: 244–258.
9.
Boycko M., Shleifer A., Vishny R. W. [1996], A theory of privatisation, The Economic Journal, 106: 309–319.
10.
Brown J. D., Earle J. S., Telegdy A. [2006], The productivity effects of privatization:.
11.
Longitudinal estimates from Hungary, Romania, Russia, and Ukraine, Journal of Political Economy, 114: 61–99.
12.
Campos N. F., Giovannoni F. [2006], The determinants of asset stripping: Theory and evidence from the transition economies, The Journal of Law and Economics, 49: 681–706.
13.
Chen M. X. [2012], The matching of heterogeneous firms and politicians, Economic Inquiry.
14.
Cull R., Matesova J., Shirley M. [2002], Ownership and the temptation to loot: Evidence from privatized firms in the Czech Republic, Journal of Comparative Economics, 30: 1–24.
15.
DeWenter K. L., Malatesta P. H. [2001], State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity, American Economic Review, 91: 320–334.
16.
Dharwadkar R., George G., Brandes P. [2000], Privatization in emerging economies: An agency theory perspective, The Academy of Management Review, 25: 650–669.
17.
Dinc I. S., Gupta N. [2011], The decision to privatize: Finance and politics, The Journal of Finance, 66: 241–269.
18.
Djankov S., Murrell P. [2002], Enterprise restructuring in transition: A quantitative survey, Journal of Economic Literature, 40: 739–792.
19.
Domadenik P., Prăsnikar J., Svejnar J. [2016], Political connectedness, corporate governance, and firm performance, Journal of Business Ethics, 139: 411–428.
20.
D’Souza J., Megginson W., Nash R. [2005], Effect of institutional and firm-specific characteristics on post-privatization performance: Evidence from developed countries, Journal of Corporate Finance, 11: 747–766.
21.
DuCharme L. L., Malatesta P. H., Sefcik S. E. [2004], Earnings management, stock issues, and shareholder lawsuits, Journal of Financial Economics, 71: 27–49.
22.
Estrin S., Hanousek J., Kocenda E., Svejnar J. [2009], The Effects of Privatization and Ownership in Transition Economies, Journal of Economic Literature, 47: 699–728.
23.
Filatotchev I., Isachenkova N., Mickiewicz T. [2007], Ownership structure and investment finance in transition economies. A survey of evidence from large firms in Hungary And Poland, Economics of Transition, 15: 433–460.
24.
Frydman R., Gray C., Hessel M., Rapaczynski A. [1999], When does privatization work? The impact of private ownership on corporate performance in the transition economies, The Quarterly Journal of Economics, 114: 1153–1191.
25.
Graham C., Prosser T. [1991], Privatizing public enterprises, Clarendon Press Oxford.
26.
Grosfeld I., Hashi I. [2005], The emergence of large shareholders in mass privatized firms: Evidence from Poland and the Czech Republic. Working Papers, halshs-00590865. HAL.
27.
Grosfeld I., Roland G. [1995], Defensive and Strategic Restructuring in Central European Enterprises, CEPR Discussion Papers, 1135. C. E. P. R. Discussion Papers.
28.
Gupta N. [2005], Partial privatization and firm performance, The Journal of Finance, 60: 987–1015.
29.
Gupta N., Ham J. C., Svejnar J. [2008], Priorities and Sequencing in Privatization: Evidence from Czech Firm Panel Data, European Economic Review, 52: 183–208.
30.
Hagemejer J., Tyrowicz J. [2011], Not All That Glitters. The Direct Effects of Privatization Through Foreign Investment, Eastern European Economics, 49: 89–111.
31.
Harper J. T. [2002], The Performance of Privatized Firms in the Czech Republic, Journal of Banking & Finance, 26: 621–649.
32.
Heckman J. J., Hotz V. J. [1989], Choosing among alternative nonexperimental methods for estimating the impact of social programs: The case of manpower training, Journal of the American Statistical Association, 84: 862–874.
33.
Heckman J. J., Robb R. [1985], Alternative methods for evaluating the impact of interventions: An overview, Journal of Econometrics, 30: 239–267.
34.
Hoff K., Stiglitz J. E. [2004], After the big bang? obstacles to the emergence of the rule of law in post-communist societies, The American Economic Review, 94: 753–763.
35.
Huang W. [2017], China’s secondary privatization: New evidence on controlling shareholders tunnelling, Applied Economics, 49: 188–201.
36.
Huang Z., Wang K. [2011], Ultimate privatization and change in firm performance: Evidence from China, China Economic Review, 22: 121–132.
37.
Klein P. G., Luu H. [2003], Politics and productivity, Economic Inquiry, 41: 433–447.
38.
Koman M., Lakícevíc M., Prăsnikar J., Svejnar J. [2015], Asset stripping and firm survival in mass privatization: Testing the Hoff-Stiglitz and Campos-Giovannoni models in Montenegro, Journal of Comparative Economics, 43: 274–289.
39.
Konings J., Cayseele P. V., Warzynski F. [2005], The effects of privatization and competitive pressure on firms’ price-cost margins: Micro evidence from emerging economies, The Review of Economics and Statistics, 87: 124–134.
40.
Levinsohn J., Petrin A. [2003], Estimating Production Functions Using Inputs to Control for Unobservables, Review of Economic Studies, 70: 317–342.
41.
Lizal L., Svejnar J. [2002], Investment, credit rationing, and the soft budget constraint: Evidence from Czech panel data, The Review of Economics and Statistics, 84: 353–370.
42.
Megginson W. L., Nash R. C., van Randenborgh M. [1994], The Financial and Operating Performance of Newly-Privatized Firms: An International Empirical Analysis, Journal of Finance: 403–452.
43.
Megginson W. L., Netter J. M. [2001], From State to Market: A Survey of Empirical Studies on Privatization, Journal of Economic Literature, 39: 321–389.
44.
Olley G. S., Pakes A. [1996], The Dynamics of Productivity in the Telecommunications Equipment Industry, Econometrica, 64: 1263–1297.
46.
Roland G. [2000], Transition and economics: Politics, markets, and firms, MIT Press.
47.
Sabirianova-Peter K., Svejnar J., Terrell K. [2012], Foreign investment, corporate ownership, and development: Are firms in emerging markets catching up to the world standard?, Review of Economics and Statistics, 94: 981–999.
48.
Lopez-de Silanes F., Shleifer A., Vishny R. [1997], Privatization in the United States, RAND Journal of Economics, 28: 447–471.
49.
Smith S. C., Cin B. C., Vodopivec M. [1997], Privatization incidence, ownership forms, and firm performance: Evidence from Slovenia, Journal of Comparative Economics, 25: 158–179.
50.
Vickers J., Yarrow G. K. [1988], Privatization: An economic analysis, 18. MIT Press.
51.
Welch B. L. [1947], The Generalization of ‘Student’s’ Problem when Several Different Population Variances are Involved, Biometrika, 34: 28–35.
52.
Winiecki J. [1994], Shaping the institutional infrastructure, Economic Inquiry, 32: 66–78.
Share
RELATED ARTICLE
| eISSN: | 2300-5238 |
© 2006-2025 Journal hosting platform by Bentus
We process personal data collected when visiting the website. The function of obtaining information about users and their behavior is carried out by voluntarily entered information in forms and saving cookies in end devices. Data, including cookies, are used to provide services, improve the user experience and to analyze the traffic in accordance with the Privacy policy. Data are also collected and processed by Google Analytics tool (more).
You can change cookies settings in your browser. Restricted use of cookies in the browser configuration may affect some functionalities of the website.
You can change cookies settings in your browser. Restricted use of cookies in the browser configuration may affect some functionalities of the website.
