The restructuring after privatization in the czech republic

Michal Mejstrik

Prague Economic Papers, 1999, vol. 1999, issue 3

Abstract: This paper explains restructuring of state-owned enterprises (SOEs) both bythe national restructuring reflecting changes in enterprise demand and bythe change of ownership oriented towards supply changes. Until 1996 thefirst factor had had the positive restructuring impact. At hte same time thegovernment, however, accepted the general presence of incomplete contracts that negatively affected the contents of privatization, seriously biasedcorporate governance and led to the poor performance of Czech capital marketresulting in highly distorted restructuring of privatized SOEs.Consolidation of shareholding in this non-transparent environment most oftenattracted the leverage takeovers by financially weak shareholders with shortterm speculative interests in the potential acquisition premium that exposedcompanies to further debt. Paper describes the costly evolution of ownershipstructures and different restructuring impact of enterprise ownership.Special attention is given to the companies controlled by alliances of fundsand by the foreign strategic shareholders. The latter had gradually createdthe islands of more complete contracts and more reliable customers andsuppliers than before.

Keywords: privatization; restructuring; corporate governance (search for similar items in EconPapers)
Date: 1999
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DOI: 10.18267/j.pep.49

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