Secondary Privatisation in Transition Economies: The Evolution of Enterprise Ownership in the Czech Republic, Poland and Slovenia

285 Pages·2003·28.354 MB·English

by  Barbara Błaszczyk, Iraj Hoshi, Richard Woodward (eds.)

Secondary Privatisation in
Transition Economies
The Evolution of Enterprise Ownership in
the Czech Republic, Poland and Slovenia
Edited by
Barbara Blaszczyk, Iraj Hoshi and
Richard Woodward
Secondary Privatisation in Transition Economies
Also by !raj Hoshi
Barriers to the Entry and Growth of New firms in Early Transition
(with Ewa Balcerowicz and Leszek Balcerowicz)
Enterprise Exit Processes in Transition Economies
(with Leszek Balcerowicz, Cheryl W. Gray and Ewa Balcerowicz)
Secondary Privatisation in
Transition Economies
The Evolution of Enterprise Ownership in
the Czech Republic, Poland and Slovenia
Edited by
Barbara BYaszczyk
Center for Social and Economic Research, Warsaw, Poland
Iraj Hoshi
Staffordshire University, Stoke on Trent, United Kingdom
Richard Woodward
Center for Social and Economic Research, Warsaw, Poland
* Editorial matter and selection and Chapter 1 ©Barbara BtaS<:ayk, lraj
Hoshi and Richard Woodward 2003. All remaining Chapters © Palgrave
Macmillan 2003
Soficover reprint of the hardcover 1st edition 2003 978-1-349-51221-8
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Library of Congress Cataloging-in-Publication Data
Se<ondary privatization in transition economies: the evolution of enter
prise ownership in the Czech Republic, Poland and Slovenia I edited by
Barbara Blaszczyk, !raj Hoshi, Richard Woodward.--1 st ed.
p.cm.
lndudes bibliographical references and index.
ISBN 978-1-4039-1537-7
l. Privatization--Poland. 2. Poland--Economic pollcy--1900-
3. Privatization--Czech Republic. 4. Czech Republic--Economic policy.
5. Privatization--SlOV1!nia. 6. Slovenia--Economic policy. l. Blaszczyk, Barbara.
II. Hoshi, !raj, 1944-Ill. Woodward, Richard.
HD4215.7.S43 2003
338.943'05--dc21
2003046943
10 9 8 7 6 5 4 3 2 1
12 11 10 09 08 07 06 05 04 03
Contents
List ofF igures ...................................................................................................... vii
List of Tables ....................................................................................................... viii
Preface ................................................................................................................ xiii
Contributors ......................................................................................................... xv
1. Ownership and Performance in Transition Economies: An Overview
Barbara Blaszczyk, !raj Hoshi, Evien Kocenda, Richard Woodward .................... !
1.1 Introduction ............................................................................................ 1
1.2 Privatisation and enterprise performance: Theory and evidence ............ 5
1.3 Overview of the book ........................................................................... 12
2. Slovenia: Ownership and Performance of Mass-Privatised Firms Marko
Simoneti, Andreja Bohm, Marko Rems, Matija Rojec, Joie P. Damijan, Boris
Majcen .................................................................................................................. 23
2.1 Introduction .......................................................................................... 23
2.2 Barriers to secondary privatisation in Slovenia .................................... 25
2.3 Evolution in ownership structure and concentration after mass
privatisation ......................................................................................... 44
2.4 Company performance and ownership changes after mass privatisation
(1995-99) ............................................................................................. 61
2.5 Conclusions .......................................................................................... 78
3. Poland 1: Ownership and Performance of Firms Privatised by
Management-Employee Buyouts Piotr Kozarzewski, Richard Woodward ••.... 91
3.1 Introduction .......................................................................................... 91
3.2 The evolution of ownership structures .................................................. 92
3.3 Factors in the post-privatisation evolution of ownership structure ....... 98
3.4 The economic performance of employee-leased companies ............... 103
3.5 Corporate governance ......................................................................... 108
3.6 Conclusions ........................................................................................ 114
Appendix ........................................................................................................ 117
4. Poland II: Ownership and Performance of the National Investment Funds
and their Portfolio Companies Barbara Blaszczyk, Michal G6rzyfzski, Tytus
Kaminski, Bartlomiej Pacz6ski ........................................................................... 123
4.1 Introduction ........................................................................................ 123
v
vi Contents
4.2 The institutional and legal framework of the NIF Programme and the
initial ownership structure of the National Investment Funds ............ 124
4.3 The changes of ownership structure of the NIFs ................................ l27
4.4 Management of the National Investment Funds: Main issues ............ 133
4.5 The privatisation policies of the funds and the resulting ownership
structures of the portfolio companies ................................................. 142
4.6 The economic performance ofNIF companies ................................... 147
4.7 Summary and conclusions .................................................................. 160
5. Tbe Czech Republic: Ownership and Performance ofVoucber-Privatised
Firms Evien Kocenda, Jura} Valachy ............................................................... 171
5.1 Privatisation in the Czech Republic: The setting for ownership
structures ........................................................................................... 171
5.2 Changes in ownership structure and the performance ofvoucher-
privatised firms .................................................................................. 176
5.3 Concluding comments ........................................................................ 205
Appendix ........................................................................................................ 207
6. Mass Privatisation and Endogenous Ownership Structure Irena Grosfeld,
!raj Hoshi ........................................................................................................... 215
6.1 Introduction ........................................................................................ 215
6.2 Ownership structure and firm performance: Ambiguous relationship 217
6.3 Wholesale privatisation and after: Reallocation of equity holdings in the
Czech Republic and Poland ............................................................... 221
6.4 Changes in ownership structure since the initial wholesale privatisation
........................................................................................................... 227
6.5 Determinants of ownership: The expected relationship ...................... 235
6.6 Econometric specification .................................................................. 237
6. 7 Conclusions ........................................................................................ 241
Appendix ........................................................................................................ 242
7. Secondary Privatisation: Summary and Lessons Learned Barbara
Blaszczyk, !raj Hoshi, Richard Woodward. ........................................................ 249
7.1 Slovenia .............................................................................................. 249
7.2 Poland ................................................................................................ 251
7.3 The Czech Republic ........................................................................... 254
7.4 Endogenous ownership structure ........................................................ 255
7.5 Conclusions ........................................................................................ 256
Index .................................................................................................................. 265
List of Figures
Figure 2.1. The number of shareholders and ownership concentration at the time
of completion of privatisation ......................................................... 48
Figure 2.2. The stake of the largest owner (C1) from the smallest to the largest
at the time of completed privatisation and the end of 1999 ............ 53
Figure 2.3. The stakes of five largest owners (C5) from the smallest to the
largest at time of completed privatisation and the end of 1999 ....... 55
Figure 4.1. The ownership share oflarge foreign investors in NIFs ............... 128
Figure4.2. The Scheme of Corporate Governance of the NIFs ...................... 136
Figure4.3. Management firms' global fees through the year 2000 and the
average yearly price capitalisation of the funds in the year 2000.141
Figure 5.1. Density functions of concentration indexes for firms involved in
voucher privatisation .................................................................... 182
Figure 5.2. Density functions of concentration indexes for firms not involved in
voucher privatisation .................................................................... 186
Figure 5.3. Densities of ownership concentration by category of single largest
owner (C1 ) .................................................................................... 207
Figure 5.4. Densities of ownership concentration by category of single largest
owner (C1) .................................................................................... 210
vii
List of Tables
Table2.1. Initial ownership concentration in companies privatised as public
(P), internal (I) and external (E) .................................................. 47
Table2.2. Ownership structures at time of completed privatisation ............ 49
Table 2.3. Changes in ownership concentration since completed privatisation
through the end of 1999 in companies privatised as public (P),
internal (I) and external (E) ......................................................... 52
Table 2.4. Ownership concentration at the end of 1999 in companies
privatised as public (P), internal (I) and external (E) .................. 52
Table2.5. Changes in ownership structures from completion ofprivatisation
to end of 1999 (%) ....................................................................... 57
Table2.6. Transformation matrix from completion of privatisation to the end
of 1999 ........................................................................................ 59
Table2.7. Transformation matrix from completion ofprivatisation to the end
of 1999 in percentage points; n=426 ........................................... 60
Table2.8. Changes in indicators of companies privatised as public (P),
internal (N) and external (E), 1995-99, n = 426 .......................... 64
Table2.9. Changes in indicators of companies that operated as public (PP),
internal (II) or external (EE) in the period 1995-99, n = 242 ...... 65
Table 2.10. Changes in indicators of companies that changed ownership type
between 1995 and 1999 in secondary privatisation: PS, IS and ES
companies, n= 184 ....................................................................... 66
Table 2.1 1. Changes in indicators of companies that were acquired by
strategic investors between 1995 and 1999 in secondary
privatisation, n=87 ...................................................................... 66
Table 2.12. Initial indicators of companies privatised as public (P), internal (I)
and external (E), 1995, n = 426 ................................................... 68
Table 2.13. Evaluation of the selection mechanism in primary privatisation by
multinomiallogit model (base group=internal privatisation; data
for 1994) ...................................................................................... 69
Table2.14. Economic efficiency-TFP growth: Selection bias and the
privatisation model effects (the combined effect of owners and
sellers) ......................................................................................... 71
Table2.15. Economic efficiency- TFP growth: Owner effect vs. agent/seller
effect ........................................................................................... 72
Table2.16. Economic efficiency-TFP growth: Owner effect vs. agent/seller
effect separated for individual privatisation model ..................... 73
Table 2.17. Economic efficiency-TFP growth: Owner effect vs. seller effect
separated for individual privatisation model, taking into account
sales to strategic investors only ................................................... 74
Table2.18. Financial performance (EBITDA to sales ratio): The privatisation
model effect (combined owner and seller effect) ........................ 76
viii
ix ListofTables
Table 2.19. Financial performance (EBITDA to sales ratio): Owner effect vs.
seller effect .................................................................................. 77
Table 2.20. Financial performance (profit to sales ratio): Owner effect vs.
seller effect .................................................................................. 7 8
Table 3.1. Ownership structure in the average employee-leased company
immediately after privatisation (%) ............................................. 93
Table 3.2. Percentage of employee-leased companies dominated by various
owner groups immediately following privatisation ..................... 93
Table 3.3. Ownership structure of employee-leased companies (weighted
averages;%) ................................................................................ 94
Table 3.4. Ownership structure of employee-leased companies (simple
averages; o/o) ................................................................................ 95
Table 3.5. Ownership structure dynamics in employee-leased companies, by
major shareholder groups (weighted averages; %) ...................... 96
Table 3.6. Number of firms in which the given ownership groups had shares
of at least 20% ............................................................................. 97
Table 3.7. Holdings of the single largest shareholder (weighted averages) .. 97
Table 3.8. Transformation matrix ................................................................. 99
Table 3.9. Evolution of ownership structure, by initial ownership structure of
the companies (weighted averages; %) ...................................... 100
Table 3.10. Evolution of ownership structure, by sector (weighted averages;
%) .............................................................................................. 101
Table 3.11. Evolution of ownership structure, by size of companies (%) ..... 101
Table 3.12. Evolution of ownership structure, by net loss vs. net profit
(weighted averages;%) ............................................................. 102
Table 3.13. Gross profitability (ratio of gross profit or loss to total reve-
nues) .......................................................................................... l04
Table 3.14. Average value of investment projects, per employee (in PLN) .104
Table3.15. Number of firms that obtained investment credit ...................... 105
Table 3.16. Average investment spending, 1993-1996 (in millions ofpre-
1995 zlotys) ............................................................................... l05
Table 3.17. Average end-of-year employment, by year ............................... 106
Table 3.18. Positive responses to new market expansion question, 1997-
1999 ........................................................................................... 107
Table 3.19. Positive responses to new market expansion question,
1997-1999 ................................................................................. 107
Table 3.20. ISO quality certification by ownership group, 1998 .................. 108
Table 3.21. Supervisory board composition in 1997-1999, by ownership
structure (%) .............................................................................. 110
Table 3.22. The body that appoints the executive board, by ownership
structure type (%) ...................................................................... 111
Table 3.23. Percentage of supervisory boards exercising given powers in
1998-1999 ................................................................................. 113
Table 3.24. Number of firms privati sed, by year(%) ................................... 117
Table 4.1. The initial shareholding structure of the NIF portfolio companies
. .................................................................................................. 125