Iraj Hashi

Mass Privatisation, Corporate Governance and Endogenous Ownership Structure

We compare the change in ownership concentration in firms privatized through two different programs of mass privatization: the Czech voucher scheme and the Polish program of National Investment Funds. Despite important differences in ownership structure at the start of the process and in the quality of legal and regulatory environments, the emerging ownership patterns are remarkably similar: in the two groups of firms we observe high concentration and the emergence of industrial corporations and individuals as important dominant shareholders. Given the important evolution of ownership, we take ownership structure as endogenous and look at its determinants. We find in particular that ownership concentration depends on the degree of uncertainty in the firms environment. In a more risky environment firms tend to have more dispersed ownership. We interpret this result in the light of the recent theories of the firm stressing the trade-off between managerial initiative and shareholder control.

Fiscal and Regulatory Impediments to the Entry of New Firms in Five Transition Economies

ABSTRACT This article focuses on the impact of fiscal and regulatory measures, at various levels of government, on the establishment of new businesses. We are interested in finding out whether, and to what extent, the existing rules and regulations (in particular the fiscal and regulatory frameworks) have impeded the entry of new firms in the early stages of transition. We are also interested in comparing the impact of such impediments amongst countries in different stages of transition. The paper is based on a survey of nearly 400 newly set up (de novo) firms in the Czech Republic, Hungary, Poland, Albania and Lithuania, all established in the 1992-94 period. We concentrate on four specific areas of regulation: registration and licensing of new businesses, rules governing the purchase or lease of commercial real estate, labour and employment laws, and the fiscal rules (taxes and contributions) to which new enterprises are subjected.

Financing constraints, credit rationing and financing obstacles: evidence from firm-level data in South-Eastern Europe

Financing constraints have been one of the major impediments to doing business in transition economies in general and South-Eastern Europe in particular. Utilizing firm-level survey data and extensive econometric modelling, the paper provides new evidence on financing constraints, credit rationing and financing obstacles for firms in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Romania and Serbia and Montenegro. The findings suggest that these phenomena are prevalent in the SEE region, especially in the small business sector, a driving force of economic development in these countries. Based on the findings, a number of policy implications aiming at reducing financing constraints for the small business sector are derived.

The Disintegration of Yugoslavia: Regional Disparities and the Nationalities Question

The end of the First World War and the break-up of the Austro-Hungarian and Ottoman empires witnessed the birth of a number of new states in Europe. The Kingdom of Serbs, Croats and Slovenes, as Yugoslavia was originally called, was one of these new states which came into existence in 1918. Sanctioned by the peace treaties of St. Germain, Neuilly and Trianon, its western and southern constituent parts separated from the former territories of Austria, Hungary, Bulgaria and Turkey and joined the kingdoms of Serbia and Montenegro which had existed as independent states before the War. Economically, socially and culturally the new state was one of the most diverse and heterogeneous countries of Europe: its population was made up of eight major and about twenty minor ethnic groups (Serbs being the largest group, followed by Croats), speaking four languages (Serbo-Croatian, Slovenian, Macedonian and Albanian), practicing three religions (catholic and orthodox Christianity and Islam), writing in two scripts (Latin and Cyrillic), and displaying massive social, cultural and economic differences. These differences played a major part in subsequent events and 41

The Evolution of Ownership Structure in Firms Privatized through Wholesale Schemes in the Czech Republic and Poland

We compare the change in ownership concentration in firms privatized through two different programs of mass privatization: the Czech voucher scheme and the Polish program of National Investment Funds. Despite important differences in ownership structure at the start of the process and in the quality of legal and regulatory environments, the emerging ownership patterns are remarkably similar in the two groups of firms: high concentration and the emergence of industrial corporations and individuals as important dominant shareholders. Given the important evolution of ownership, we take ownership structure as endogenous and look at its determinants. We find in particular that ownership concentration depends on the degree of uncertainty in the firms environment. In a more risky environment firms tend to have more dispersed ownership. We interpret this result in the light of the recent theories of the firm stressing the trade-off between managerial initiative and shareholder control.

Corporate Governance and Ownership Structure in the Transition: The Current State of Knowledge and Where to Go from Here

The purpose of the paper is to present the current state of knowledge on both theoretical models and empirical evidence of interrelations between emerging corporate governance mechanisms and ownership structure of privatized enterprises in post-Communist countries. Section 2 contains extensive literature review on the subject. In Section 3, the results of the research coordinated by CASE on post-privatization changes in ownership structure of Polish, Czech and Slovenian enterprises are presented. In Section 4, the Authors present conclusions and a few suggestions for policy makers.

Empirical Data on Sociedades Laborales, 1999–2013

We observe a shift in legal form from joint stock SLs (SALs) to limited liability SLs (SLLs) over time with the overall number of SLs rising by 18% from 9,620 firms in 1999 to 11,322 in 2013. During the same period, though, the number of workers employed in SLs declined by 16%—from 75,606 workers to 63,472. Reflecting the shift to the smaller form of corporation, nevertheless, both population (from 5,060 to 9,984) and employment (from 20,808 to 47,727) of SLLs doubled in the same interval. However, these official employment figures do not capture independent workers which are estimated to account for between 15 and 25% of overall employment. This decrease was mainly due to the financial crisis; the largest loss occurred in the construction sector.

Evaluation of the Programme

Unlike most ALMP start-ups, SLs as a rule attract outside capital. Investing partners represent 27% of partners in all SLs founded in Spain between 2003 and 2013. Furthermore, according to employment data for 2008–2013, 1.3 additional jobs were created per founding worker partner in Spain.

Review of the Literature on Employee-Owned Firms

Many of the benefits of employee share ownership are complementary to the policy aims of ALMPs. With regard to SLs this is in particular the case for employment, retention of key staff, access to finance and resilience. The feature that SLs are set up as corporations by a minimum of three partners makes them genuinely different from other ALMP start-up schemes in particular with regard to access to capital. However, over time SLs sometimes face difficulties to comply with the 50% threshold of employee ownership, a problem that is known as deliberate ‘disqualification’. While a change of employee-owned firms to private firms is sometimes connected to possible tensions between owner workers and non-owner workers in the case of SLs disqualification is related rather to the inability not the unwillingness of new employees joining a SL to acquire its shares.

Benchmarking Financial Participation in the EU

The PEPPER IV Report is an interdisciplinary legal and economic comparative study. It provides a comparative assessment of financial participation in the EU-27 and in the candidate countries. It is based on coherent and thus, for the first time, comparable indicators.