This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2024
  4. Program
  5. Revisiting State Ownership and Privatization
« Back to Results

Revisiting State Ownership and Privatization

Paper Session

Friday, Jan. 5, 2024 2:30 PM - 4:30 PM (CST)

Marriott Rivercenter, Conference Room 7
Hosted By: Association for Comparative Economic Studies & Society for Institutional and Organizational Economics
  • Chair: Scott Gehlbach, University of Chicago

The Big Sell: Privatizing East Germany's Economy

Moritz Lubczyk
,
Rockwool Foundation Berlin
Moritz Hennicke
,
Free University of Brussels
Lukas Mergele
,
BSS

Abstract

Departing from communism, East Germany witnessed history’s most exten- sive privatization program. While the program sparked global interest as a blueprint for privatization, its effectiveness remains disputed. Using unique firm-level data, we examine the program’s objective to privatize the most competitive firms. We document that firms with higher baseline productivity are more likely to be privatized, yield higher prices, are more often acquired by West Germans, and are more likely to survive 20 years later. Inspecting the inner workings of the privatization agency, we illustrate challenges and lessons for government interventions attempting to target the right firms to promote policy goals.

State Ownership and Corporate Leverage around the World

Ralph De Haas
,
European Bank for Reconstruction and Development
Sergei Guriev
,
Sciences Po
Alexander Stepanov
,
European Bank for Reconstruction and Development

Abstract

Does state ownership hinder or help firms access credit? We use data on almost 4 million firms in 89 countries to study the relationship between state ownership and corporate leverage. Controlling for country-sector-year fixed effects and conventional firm-level determinants of leverage, we show that state ownership is robustly and negatively related to corporate leverage. This relationship holds across most of the firm-size distribution – with the important exception of the largest companies – and is stronger in countries with weak political and legal institutions. A panel data analysis of privatised firms and a comparison of privatised with matched control firms yield similar qualitative and quantitative effects of state ownership on leverage.

Revisiting the Productivity Effects of (Staggered) Privatization

Scott Gehlbach
,
University of Chicago
John Earle
,
George Mason University
Solomiya Shpak
,
Kyiv School of Economics, National Bank of Ukraine, and George Mason University

Abstract

Extensive programs in East Europe and the former Soviet Union rapidly privatized vast numbers of firms in a short period of time. Whether these programs had immediate impacts on firm-level productivity has been the subject of political controversy and empirical research.

We revisit the productivity effects of privatization, accounting for the fact that, even where firms were privatized most rapidly—for instance, through “mass privatization” using vouchers—there was a several-year period of implementation, with some firms privatized earlier and some later. As highlighted in recent econometric research, the “two-way fixed effects” model previously used to estimate privatization effects entails comparisons not only between groups that are treated (privatized) and never-treated (remaining state), but also among treated firms receiving treatment at different times. If treatment effects are heterogeneous across groups and vary over time, the standard regression estimates with staggered treatments may not be interpretable as measuring a causal relationship.

Exploiting comprehensive manufacturing data for Hungary, Romania, Russia, and Ukraine, we use new panel-data methods to more reliably the impact of privatization on firm performance. Our results shed new light on a critical period in the political economy of Eastern Europe and the former Soviet Union.
JEL Classifications
  • P0 - General
  • L0 - General