When does privatization work? The impact of private ownership on corporate performance in the transition economies

Roman Frydman, Cheryl Gray, Marek Hessel, Andrzej Rapaczynski

    Research output: Contribution to journalArticle

    Abstract

    This paper compares the performance of privatized and state firms in the transition economies of Central Europe, while controlling for various forms of selection bias. It argues that privatization has different effects depending on the types of owners to whom it gives control. In particular, privatization to outsider, but not insider, owners has significant performance effects. Where privatization is effective, the effect on revenue performance is very pronounced, but there is no comparable effect on cost reduction. Overlooking the strong revenue effect of privatization to outsider owners leads to a substantial overstatement of potential employment losses from postprivatization restructuring.

    Original languageEnglish (US)
    Pages (from-to)1153-1191
    Number of pages39
    JournalQuarterly Journal of Economics
    Volume114
    Issue number4
    DOIs
    StatePublished - Nov 1999

    ASJC Scopus subject areas

    • Economics and Econometrics

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