Inside ownership, internal influence, and enterprise behavior: Evidence from the Mongolian large privatization.

摘要

Privatization is a key policy for reforming the public sector in transition economies. An objective of privatization is to foster restructuring by enterprises to make them more responsive to market forces and enhance their long-term viability. This dissertation examines the mass privatization of large enterprises in Mongolia to provide empirical evidence on two important issues in the literature, the structure and determinants of ownership and the restructuring behavior of enterprises.;The author uses a data set combining official government statistics and a survey of 106 Ulaanbaatar privatized enterprises. The comprehensive survey collected information on firm behavior along several dimensions (e.g. restructuring activity, relation to the state) and on the internal allocation of decision-making influence among seven entities (e.g. shareholders, general directors, workers, central and local governments) for thirteen decision types in 1990 and 1993 (e.g. setting wage and employment levels).;As in many other transition economies, Mongolia's privatization program resulted in high insider ownership. Unlike other countries, the Mongolian outcome was not due to political concessions to workers but rather to their purchase behavior on the auction market for shares, given numerous alternatives. To explain this result, econometric models of outsider and insider market purchases are specified and estimated. The primary characteristics that distinguish firms with high insider ownership are high liquidity and some retained state ownership. Inside information about the internal allocation of influence contributes to explaining insider purchases, with the evidence pointing to higher insider purchases in firms with strong and stable management.;Survey data further indicate that privatized enterprises, by and large, did not undertake difficult restructuring decisions in the first few months after privatization. Ordered probit models are used to investigate the relationship between costly restructuring activities that did take place and firms' ownership structure and internal influence. We observe from these analyses that state ownership and influence consistently represent an obstacle to enterprise adjustment and that outside governance bodies only weakly represent their constituents. These analyses lead us to conclude that shifts in ownership among eligible groups (e.g. state, insiders, outsiders) and strengthened governance institutions can raise the likelihood of restructuring activities being pursued.