Ownership Structure and Enterprise Restructuring in Six Newly Independent States

This study investigates the relation between ownership structure and enterprise restructuring in six Newly Independent States. We document the changing pattern of ownership in 960 privatized manufacturing companies in the 1995-97 period. There are large differences in the ownership structure across countries, and these differences seem to be determined by the type of privatization methods pursued. We show that foreign ownership is positively associated with enterprise restructuring at high ownership levels (above 30% of total shares). In contrast, the relation between manager ownership and enterprise restructuring is non-monotonic, positive at low (below 10%) or high (above 30%) stakes, but negative at intermediate levels. Finally, we show that ownership by outside local investors or the state is not significantly correlated with restructuring.