Origin and Concentration: Corporate Ownership, Control and Performance

We analyze the effects of different types and concentration of ownership on performance using a population of firms in a model transition economy (Czech Republic) after mass privatization. Specifications based on first-differences combined with instrumental variables show that contrary to conventional wisdom, the effects of different types of ownership and ownership changes are limited. Concentrated ownership has a positive effect but only in some instances and a positive effect of foreign ownership is detectable primarily for majority ownership and for ownership by foreign industrial (non-financial) firms. The estimated effects of concentrated ownership support the agency theory and go against theories stressing the positive effects of managerial autonomy. The state as a holder of the golden share has a positive effect on employment and in some specifications also on output and profitability. Overall, our results suggest that the post-privatization effects of many, though not all, types of ownership on performance are indistinguishable from that of state ownership. (JEL Classification: C33, D20, G32, G34, L20)