Concepts and Models of Corporate Governance: the Case of Ukraine

The success of the various countries can often be linked to the type of privatization that was followed to take businesses from state-owned enterprises to joint stock companies to public companies (Djankov S., G. Pohl, 1996), (Carlin W., M. Landesmann, 1997). In general there are three types of privatization process: the first one is a mass privatization model, state-owned assets being distributed free of charge to the general public through vouchers that can be traded for ownership shares in state-owned firms (Earle J., A. Telegdy, 1998). This model is sometimes referred to as the voucher privatization method and was used in the Czech Republic and Russia (Barberis N., M. Boycko, A. Shieifer, N. Tsukanova, 1996). The second model allowed management and employees buying company assets. This method was the method adopted in Poland. The third model, and arguably the one which produced the most successful result, involved selling majority control to an outside investor (La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny, 2000). This third model was followed in Hungary and also in Estonia. As Christine Mallin (2004) suggests that the method of privatization has tended to have more of an immediate impact on the development of corporate governance than the legal framework in these countries. From this perspective, Ukraine is a unique country to research. All three methods of privatization were used in Ukraine step by step. The first was the method which allowed management and employees to buy company shares (1992-1995). The second was the voucher privatization (1995-1999). The third method was that of selling shares to outside investors (1999-recently). Let us consider how corporate governance changed during each method of privatization.