Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic

Using a new data set on privatized firms in the Czech Republic, the authors examine how the design of privatization affects outcomes. Earlier studies of privatization in the Czech Republic focused largely on how the broad distribution of shares thr...

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Main Authors:	Cull, Robert, Matesova, Jana, Shirley, Mary
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ASSETS AUCTION AUCTIONS BANK LOANS BANKRUPTCY BID BIDDING CAPITAL MARKETS COMPANY COMPETITION POLICY CORPORATE CONTROL CORPORATE GOVERNANCE DEBT DEVELOPMENT ECONOMICS DISCOUNTED VALUE DIVIDENDS ECONOMIC RESEARCH ECONOMIC VALUE ECONOMICS RESEARCH EXPROPRIATION FIXED ASSETS FOREIGN FIRMS GROWTH RATE JOINT STOCK COMPANIES LARGE ENTERPRISES LARGE SHAREHOLDERS OPTIMIZATION OWNERSHIP STRUCTURE PRODUCTIVE ASSETS PROFITABILITY ROA SHAREHOLDERS SMALL ENTERPRISES SOLE PROPRIETORSHIPS STATE OWNED ENTERPRISES STATEMENTS TRANSITION ECONOMIES UNEMPLOYMENT WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2001/03/1047468/ownership-structure-temptation-loot-evidence-privatized-firms-czech-republic http://hdl.handle.net/10986/19690

id	okr-10986-19690
recordtype	oai_dc
spelling	okr-10986-196902021-04-23T14:03:44Z Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic Cull, Robert Matesova, Jana Shirley, Mary ASSETS AUCTION AUCTIONS BANK LOANS BANKRUPTCY BID BIDDING CAPITAL MARKETS COMPANY COMPETITION POLICY CORPORATE CONTROL CORPORATE GOVERNANCE DEBT DEVELOPMENT ECONOMICS DISCOUNTED VALUE DIVIDENDS ECONOMIC RESEARCH ECONOMIC VALUE ECONOMICS RESEARCH EXPROPRIATION FIXED ASSETS FOREIGN FIRMS GROWTH RATE JOINT STOCK COMPANIES LARGE ENTERPRISES LARGE SHAREHOLDERS OPTIMIZATION OWNERSHIP STRUCTURE PRODUCTIVE ASSETS PROFITABILITY ROA SHAREHOLDERS SMALL ENTERPRISES SOLE PROPRIETORSHIPS STATE OWNED ENTERPRISES STATEMENTS TRANSITION ECONOMIES UNEMPLOYMENT WEALTH Using a new data set on privatized firms in the Czech Republic, the authors examine how the design of privatization affects outcomes. Earlier studies of privatization in the Czech Republic focused largely on how the broad distribution of shares through vouchers may have motivated the new owners to strip assets from the privatized firms. The authors find evidence for static asset stripping, but also for what Akerlof and Romer (1993) call looting - borrowing heavily with no intent to repay and using the loans for private purposes. This looting occurred because the larger privatized companies had privileged access to credit from state-controlled banks, which had little incentive to enforce debt contracts. The policy implications are significant: financial incentives and regulation are as important as ownership structure in the design of privatization. 2014-08-26T17:46:52Z 2014-08-26T17:46:52Z 2001-03 http://documents.worldbank.org/curated/en/2001/03/1047468/ownership-structure-temptation-loot-evidence-privatized-firms-czech-republic http://hdl.handle.net/10986/19690 English en_US Policy Research Working Paper;No. 2568 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Europe and Central Asia Czech Republic
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ASSETS AUCTION AUCTIONS BANK LOANS BANKRUPTCY BID BIDDING CAPITAL MARKETS COMPANY COMPETITION POLICY CORPORATE CONTROL CORPORATE GOVERNANCE DEBT DEVELOPMENT ECONOMICS DISCOUNTED VALUE DIVIDENDS ECONOMIC RESEARCH ECONOMIC VALUE ECONOMICS RESEARCH EXPROPRIATION FIXED ASSETS FOREIGN FIRMS GROWTH RATE JOINT STOCK COMPANIES LARGE ENTERPRISES LARGE SHAREHOLDERS OPTIMIZATION OWNERSHIP STRUCTURE PRODUCTIVE ASSETS PROFITABILITY ROA SHAREHOLDERS SMALL ENTERPRISES SOLE PROPRIETORSHIPS STATE OWNED ENTERPRISES STATEMENTS TRANSITION ECONOMIES UNEMPLOYMENT WEALTH
spellingShingle	ASSETS AUCTION AUCTIONS BANK LOANS BANKRUPTCY BID BIDDING CAPITAL MARKETS COMPANY COMPETITION POLICY CORPORATE CONTROL CORPORATE GOVERNANCE DEBT DEVELOPMENT ECONOMICS DISCOUNTED VALUE DIVIDENDS ECONOMIC RESEARCH ECONOMIC VALUE ECONOMICS RESEARCH EXPROPRIATION FIXED ASSETS FOREIGN FIRMS GROWTH RATE JOINT STOCK COMPANIES LARGE ENTERPRISES LARGE SHAREHOLDERS OPTIMIZATION OWNERSHIP STRUCTURE PRODUCTIVE ASSETS PROFITABILITY ROA SHAREHOLDERS SMALL ENTERPRISES SOLE PROPRIETORSHIPS STATE OWNED ENTERPRISES STATEMENTS TRANSITION ECONOMIES UNEMPLOYMENT WEALTH Cull, Robert Matesova, Jana Shirley, Mary Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic
geographic_facet	Europe and Central Asia Czech Republic
relation	Policy Research Working Paper;No. 2568
description	Using a new data set on privatized firms in the Czech Republic, the authors examine how the design of privatization affects outcomes. Earlier studies of privatization in the Czech Republic focused largely on how the broad distribution of shares through vouchers may have motivated the new owners to strip assets from the privatized firms. The authors find evidence for static asset stripping, but also for what Akerlof and Romer (1993) call looting - borrowing heavily with no intent to repay and using the loans for private purposes. This looting occurred because the larger privatized companies had privileged access to credit from state-controlled banks, which had little incentive to enforce debt contracts. The policy implications are significant: financial incentives and regulation are as important as ownership structure in the design of privatization.
format	Publications & Research :: Policy Research Working Paper
author	Cull, Robert Matesova, Jana Shirley, Mary
author_facet	Cull, Robert Matesova, Jana Shirley, Mary
author_sort	Cull, Robert
title	Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic
title_short	Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic
title_full	Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic
title_fullStr	Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic
title_full_unstemmed	Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic
title_sort	ownership structure and the temptation to loot : evidence from privatized firms in the czech republic
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2001/03/1047468/ownership-structure-temptation-loot-evidence-privatized-firms-czech-republic http://hdl.handle.net/10986/19690
_version_	1764440365487620096

Ownership Structure and the Temptation to Loot : Evidence from Privatized Firms in the Czech Republic

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