Enterprise Break-ups and Performance During the Transition
Miroslav Singer and
Jan Svejnar ()
No 1757, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper estimates the effects of the 1991 breakups of Czechoslovak state-owned enterprises (SOEs) on subsequent performance of the master enterprises and the spin-off units. The analysis is based on quarterly and annual data of Czechoslovak industrial enterprises. We estimate the performance effect of a spin-off by comparing the performance of enterprises that were present throughout the 1990–92 period, but did not experience any spin-offs, to that of: a) master enterprises that experienced spin-offs; and b) the new spin-off subsiduaries. The estimates suggest that the breakups had a significant immediate (1991) effect on productive efficiency and profitability of industrial firms. The effect was positive for small to slightly above-average size spin-offs and negative for large ones. The hypothesis that the estimated effect of spin-offs on performance was identical for the spin-off subsiduaries and the master enterprises that experienced the spin-offs cannot be rejected. The 1991 estimates thus strongly suggest that the large firms created under the centrally-planned system suffered from inefficiencies that were alleviated by the break-ups of these firms into smaller units.
Keywords: Breakup; Czechoslovakia; Firms; Spin-off; Transition (search for similar items in EconPapers)
JEL-codes: D21 D24 L11 P11 (search for similar items in EconPapers)
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