The Results of 'Mass Privatization' in Romania: A First Empirical Study
Posted: 20 Jan 1999
This paper provides an assessment of the contribution to privatization in Romania of the 1995-96 Mass Privatization Program (MPP), which offered shares in nearly 5000 companies to citizens in exchange for coupons. Analyzing a comprehensive database of MPP companies, we find that an average of only 18.7 per cent of their shares were actually transferred to Romanian citizens, and only 7.8 per cent of the companies were majority privatized (on a size-weighted basis). We estimate that the MPP accounted for only about 5.5 per cent of the value of state-owned enterprise assets inherited from the socialist period. The design of the program created highly dispersed ownership structures, which is likely to create particularly difficult problems in the many small companies in the program. We place our findings in the context of the history of Romanian privatization policies since 1990, we provide some comparisons with mass privatization programs in other countries, and we analyze the implications of the MPP for the corporate governance and restructuring of enterprises.
JEL Classification: G32, L33, O52, P00
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