Channels of Restructuring in Privatized Czech Companies

34 Pages Posted: 29 Sep 2006

See all articles by Jana P. Fidrmuc

Jana P. Fidrmuc

Warwick Business School - Finance Group

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Abstract

The main contribution of this paper to the literature on restructuring in transition economies of Central and Eastern Europe is the analysis of productivity-growth effects for different channels of restructuring. It examines a panel of 737 voucher-privatized Czech companies in the first years after the transfer of ownership (between 1993 and 1998). The results indicate that asset sales and employee incentives serve as restructuring channels through which productivity of the privatized companies increases. The analysis also indicates that capital expenditures, labor shedding, and CEO replacements are not significantly correlated to productivity growth. Furthermore, the analysis suggests that the availability of bank loans is positively associated with productivity growth but not for less profitable firms. This provides some evidence in support of soft budget constraints accommodated via bank lending.

Keywords: Productivity, Restructuring, Transition, Privatization

JEL Classification: G30, G34, P31

Suggested Citation

Fidrmuc, Jana P., Channels of Restructuring in Privatized Czech Companies. Economics of Transition, Forthcoming, WBS Finance Group Research Paper No. 68, Available at SSRN: https://ssrn.com/abstract=933385

Jana P. Fidrmuc (Contact Author)

Warwick Business School - Finance Group ( email )

Warwick Business School
Coventry CV4 7AL
United Kingdom

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