The determinants of ownership after privatization–the case of Russia
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We use a unique data set of 530 Russian manufacturing firms to investigate the determinants of ownership after privatization. In particular, we estimate determinants of the decision to privatize a firm and of the initial ownership distribution after the mass privatization program (1992-94). For the latter estimation we use a tobit model with sample selection. The paper provides empirical tests for predictions of the model of ownership choice in insider privatization by Aghion and Blanchard (1998). Thus, we find that collusion among workers matters for their decision to sell shares to outsiders and raises their stake. Also, insiders typically select an option of privatization leading to higher insider ownership more frequently in firms in financial distress. This can be explained by the desire of insiders to insure against unemployment by acquiring more shares in those companies. Capital-intensive firms with a higher need for investment have higher stakes of outside owners, and their ownership structure is more concentrated. Lastly, in line with the model, but in contrast to the objectives of the privatization program in Russia, we observe high and persistent ownership stakes of firm insiders, i.e. managers and workers.
CONF
32nd Annual Meeting of the European Finance Organization
Sprenger, Carsten
2006
Moscow
1898
