Privatisation, corporate control and employment growth:evidence from a panel of large Polish firms, 1996-2002

Using data on Polish firms this paper examines the relationship between corporate control structures, sales growth and the determinants of employment change. Privatised and de novo firms are the main drivers of employment growth; in the case of de novo firms, it is foreign ownership which underpins the result. Being privatised has a positive impact on employment but this is concentrated within a range of 3–6 years after privatisation. There are no systematic differences in employment response to negative sales growth across the ownership categories. Employment in state firms is less responsive to positive sales growth. From these results we infer that the behaviour of state firms is affected by both insider rent sharing and binding budget constraints.

Wage bargaining, privatisation, ability to pay and outside options:evidence from Hungary

This article examines the determinants of short-term wage dynamics, using a sample of large Hungarian companies for 1996–99. We test the basic implications of an efficient contract model of bargaining between incumbent employees and managers, which the data do not reject. In particular, there are structural differences between the ownership sectors consistent with our prior knowledge on relative bargaining strength and unionisation measures. Stronger bargaining position of workers leads to higher ability to pay elasticity of wages, and lower outside option elasticity. Our results indicate that while bargaining position of workers in domestic privatised firms may be weaker than in the state sector, the more robust difference relates to state sector workers versus privatised firms with majority foreign ownership.

Privatisation, corporate control and employment growth:evidence from a panel of large Polish firms, 1996-2002

Using panel data on large Polish firms this paper examines the relationship between corporate control structures, sales growth and the determinants of employment change during the period 1996-2002. We find that privatised and de novo firms are the main drivers of employment growth and that, in the case of de novo firms, it is foreign ownership which underpins the result. Interestingly, we find that being privatised has a positive impact on employment growth but that this impact is concentrated within a range of three to six years after privatisation. In contrast with the findings of earlier literature, we find evidence that there are no systematic differences in employment response to negative sales growth across the ownership categories. On the other hand, employment in state firms is less responsive to positive sales growth. From these combined results we infer that the behaviour of state firms is constrained by both insider rent sharing and binding budget constraints. Consistent with this, we find that privatised companies, three to six years post-privatisation, are the firms for whom employment is most responsive to positive sales growth and as such, offer the best hope for rapid labour market expansion.

Wage bargaining, privatisation, ability to pay, and outside options:evidence from Hungary

This paper examines the determinants of short-term wage dynamics, using a sample of large Hungarian companies for the period of 1996-1999. We test the basic implications of an efficient contract model of bargaining between the incumbent employees and the managers, which we are unable to reject. In particular, there are structural differences between the ownership sectors consistent with our prior knowledge on relative bargaining strength and unionisation measures. Stronger bargaining position of workers leads to higher ability to pay elasticity of wages, and lower outside option elasticity. Our results indicate that while bargaining position of workers in domestic privatised firms may be weaker than in the state sector, the more robust difference relate to state sector workers versus the privatised firms with the majority foreign ownership. We examine several extensions. We augment the bargaining specification by controls related to workers' skills and find that the basic findings are robust to that. We take a closer look at the outside options of the workers. We find some interactive effects, where unemployment modify the impact of availability of rents on wages. We interpret our results as an indication that bargaining power of workers may be affected by changes in their outside options. We also experiment with one concise indicator of reservation wage which is closest to the theoretical model specification and combines sectoral wages, unemployment benefits and regional unemployment levels,. We found that measure performing well. Finally, we found that while responsiveness of wages towards ability to pay is higher in the state sector, variation in wage dynamics is lower. This may indicate some wage smoothing in the state sector, consistent with the preferences of employees.

Privatisation in Poland:ten years after

The purpose of this article is to compare economic discussion on privatisation, expected privatisation outcomes and actual results in Poland. First it discusses the privatisation of state enterprises in the broader context of the economic transformation programme designed and introduced at the end of 1989 and the beginning of 1990. It examines the choice of privatisation methods, the political economy of privatisation and the three major policy issues: pace of privatisation, sequence of privatisation and the authority to initiate and carry out privatisation. The final section compares privatisation blueprints and actual results. The appendix presents a detailed technical guide to the privatisation methods in Poland and a basic set of figures illustrating the outcome.

Endogenous ownership structure:factors affecting the post-privatisation equity in largest Hungarian firms

Using a data set for the 162 largest Hungarian firms during the period of 1994-1999, this paper explores the determinants of equity shares held by both foreign investors and Hungarian corporations. Evidence is found for a post-privatisation evolution towards more homogeneous equity structures, where dominant categories of Hungarian and foreign owners aim at achieving controlling stakes. In addition, focusing on firm-level characteristics we find that exporting firms attract foreign owners who acquire controlling equity stakes. Similarly, firm-size measurements are positively associated with the presence of foreign investors. However, they are negatively associated with 100% foreign ownership, possibly because the marginal costs of acquiring additional equity are growing with the size of the assets. The results are interpreted within the framework of the existing theory. In particular, following Demsetz and Lehn (1985) and Demsetz and Villalonga (2001) we argue that equity should not be treated as an exogenous variable. As for specific determinants of equity levels, we focus on informational asymmetries and (unobserved) ownership-specific characteristics of foreign investors and Hungarian investors.

The impact of privatisation and regulation on the water and sewerage industry in England and Wales:a translog cost function approach

After the ten Regional Water Authorities (RWAs) of England and Wales were privatized in November 1989, the successor Water and Sewerage Companies (WASCs) faced a new regulatory regime that was designed to promote economic efficiency while simultaneously improving drinking water and environmental quality. As legally mandated quality improvements necessitated a costly capital investment programme, the industry's economic regulator, the Office of Water Services (Ofwat), implemented a retail price index (RPI)+K pricing system, which was designed to compensate the WASCs for their capital investment programme while also encouraging gains in economic efficiency. In order to analyse jointly the impact of privatization, as well as the impact of increasingly stringent economic and environmental regulation on the WASCs' economic performance, this paper estimates a translog multiple output cost function model for the period 1985–1999. Given the significant costs associated with water quality improvements, the model is augmented to include the impact of drinking water quality and environmental quality on total costs. The model is then employed to determine the extent of scale and scope economies in the water and sewerage industry, as well as the impact of privatization and economic regulation on economic efficiency.

Market reforms and privatisation in the English National Health Service

The article examines developments in the marketisation and privatisation of the English National Health Service, primarily since 1997. It explores the use of competition and contracting out in ancillary services and the levering into public services of private finance for capital developments through the Private Finance Initiative. A substantial part of the article examines the repeated restructuring of the health service as a market in clinical services, initially as an internal market but subsequently as a market increasing opened up to private sector involvement. Some of the implications of market processes for NHS staff and for increased privatisation are discussed. The article examines one episode of popular resistance to these developments, namely the movement of opposition to the 2011 health and social care legislative proposals. The article concludes with a discussion of the implications of these system reforms for the founding principles of the NHS and the sustainability of the service.

From privatisation to nationalisation: Repsol-YPF, 1999–2012

In April 2012 Argentinean Government nationalized 51% of Repsol shares in YPF. Expropiation of YPF is a new step in a broad list of protectionist and interventionist decisions, such as the nationalization of Aerolíneas Argentinas, nationalization of private pension plans, or the amendments of the Central Bank regulations to make the use of reserves more flexible. Institutions set the rules of the game for citizens and companies, allowing incentives and creating expectations. Nationalization of the above mentioned Argentinean companies has created legal uncertainty bringing a relevant increase in the risk premium as a result. Privatization of YPF and its later nationalization, together with the company shareholder composition, and resulting international disputes will be addressed in this article.

Privatisation and accountability in a “crony capitalist” Nigerian state

Nigeria is richly endowed with oil and gas resources, but the country’s continued reliance on loans from international financial institutions raises questions about the transparency and accountability of its utilisation of the huge revenues resulting from these two resources. In order to attract international capital to bolster its revenues from sales of oil and gas, a huge proportion of which continues to be used corruptly, the World Bank has encouraged the Nigerian government to subscribe to neoliberal economic policies by enlisting accounting firms and privatising state-owned enterprises. Key justifications for this have included enhancing accountability, reducing public-sector corruption, promoting market efficiency and attracting international capital. However, this paper presents evidence of the role of accounting in the undervaluation of assets, concealment of possible malpractice, and subversion of the accountability that it should have delivered in the privatisation process. The assumption that accounting will enhance accountability, reduce public-sector corruption and promote market efficiency in privatisation, and ultimately attract investment into a crony capitalist Nigerian state, appears to be an illusion created partly through the apparent legitimacy of accounting.

Does partial privatisation improve performance? Evidence from a chain of hotels in Portugal

This article contributes to the literature by testing six research hypotheses regarding the impact of partial privatisation on firms' performance. We measure performance using Data Envelopment Analysis (DEA), the Malmquist Index and ratios related to labour productivity, profitability and capacity utilisation. We use the Wilcoxon Signed Rank test to compare the performance after privatisation with that before privatisation. The hypotheses are tested with data from a chain of Portuguese heritage hotels, partially privatised in 2003. We conclude that productivity growth after privatisation is superior to productivity growth before privatisation due to technological progress. However, due to a frontier regress observed in the privatisation year, total factor productivity and profitability deteriorated after privatisation. This suggests that both efficiency changes and frontier shifts should be taken into account in order to accurately assess the impact of privatisation.

Leveraging training outcomes on public construction projects

The paper explores the efficacy of public agencies using their contracting relationships with private firms to affect training outcomes in the construction industry. It develops a theoretical perspective on this issue by extending a framework that was originally developed by Hart, Schleifer and Vishny (1997) to study privatisation. This paper shows how their framework can also be applied to situations where the provision of public works is already privatised and the government is attempting to regulate training outcomes via a contracting arrangement. An empirical study of two training policies of the Western Australian government complements this theoretical discussion. We report the results of an analysis of data drawn from the government’s Tender Registration System between 1997 & 2006. As such we use a unique and comprehensive resource to examine the possible effects of new training policies on an important segment of the construction ‘market’.

Developing leadership and management capability for the future of an industry

The importance of having effective managers in an organisation who possess both management and leadership abilities is rarely questioned. However, should we be taking this a step further and looking to the challenge of leadership within an industry sector? The rail industry in Australia faces a challenging future: an aging workforce, geographical spread, privatisation and corporatisation, plus particular issues of industry image and culture. This paper reports the findings of an exploratory study into the current approaches to leadership and management development in the Australian rail industry. It discusses critical issues facing the sector and outlines some theoretical approaches to addressing these issues.

Space and Cyberspace: on the enclosure of consciousness

In this chapter I argue that the global privatisation of elctromagnetic spectrum marks this period as historically unique. I also put forward conceptual categories for understanding the nature of an emergent cybereconomy. They correspond to classical conceptions of property, value and labour, but in no way treat these categories as singular, simple or unproblematic. From a perspective informed largely by Marx’s critique of classical political economy, I frame the creation of a global cyberspace as the enclosure, or “privatisation”, of conscious activity. I argue that a full and formally defined cyberspace, at least as it is currenty conceived of, must prefigure the eventual alienation of human social existence at its most fundamental and definitive level: consciousness.