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Begin New Search Topic Ownership Political Geography Czech Republic

1. Restructuring in the Czech Republic- Beyond Ownership & Bankruptcy

Author:
Gerald A. McDermott and Aydin Hayri
Publication Date:
01-1995
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Restructuring of large industrial holdings in the Czech Republic (S-farms) depends on probes into new markets. The development and financing of probes generates internal holdups and stalemates among the government, banks, and S firms. The government tries to preserve the value of just-privatized S-firms while avoiding subsidies; banks, facing their delinquency, cannot force bankruptcy since keeping them as clients is as important as maintaining capital ade quacy. A compromise arises, 1MBR (intricate monitoring based restructuring), where the outside parties condition their involvement on a peculiar reorganization of the farm. We provide the empirical and theoretical underpinnings of IMBR, the emergence of which is neither deliberate nor accidental. (Keywords; Restructuring, privatization, incom plete contracts, monitoring) ·We use aliases for the names of their companies and their managers to protect their privacy. An earlier version of this paper was presented at the Ford Foundation Conference on CR transition at CERGE-EI. Prague CR. May 1994. '!The research was conducted at CERGE-EI. Prague CR. where Hayri was a visiting professor and McDermott is a visiting re searcher. McDermott's dissertation research was supported by generous grants from the US-CR Fulbright Commission and the Center for European Studies. Harvard University. The authors would like to thank CERGE-EI for its gracious administra tive support and hospitality and the following people for insightful comments and help: Suzanne Berger. Ales Capek. Zhi­yuan Cui. Jeremy Edwards. John Griffin, Miroslav Hrncir. Mike Jetton. Tony Levitas, Richard Locke. Ivana MazaIkova, Gerard Roland. Charles Sabel, David Stark. Frantisek Turnovec, and participants in a seminar at the University of Warwick.
Topic:
Privatization, Industry, Farming, Ownership, Debt Restructuring, and Bankruptcy
Political Geography:
Eastern Europe and Czech Republic

2. Governing Enterprises in Transition Economies: The Problem of Mixed Ownership in the Czech Republic

Author:
Raj M. Desai
Publication Date:
01-1995
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
This paper examines how formerly state-owned enterprises are governed in a post-Communist economy. Privatization was intended to clarify ownership rights by making private property the basis for productive relations. Inreality, gov ernments still own substantial percentages of share capital in "privatized" enterprises. and the question of who controls the company often remains unclear. Two dimensions of emerging corporate-governance structures are examined for enterprises under joint public-private ownership: contract enforcement and the influence of the state-as shareholder. The main argument is that these structures are determined according to government-investor negotiations over how to relinquish control of firms and privatize their cash flows, and proceeds in two steps. First, state authori ties and prospective investors commit to the terms of privatization. Second, instruments of contract enforcement and state influence emerge from these commitments through bargaining. Evidence from two industry cases in the Czech Republic-steel and petrochemicals-shows that contract-enforcement is delegated to a third party when a govern ment cannot credibly commit to all the privatization terms desired ex ante by investors who prefer long-term, Jarge bloc equities; additionally, the state's fiduciary influence will be limited if ministries and property agencies are politically unified. Delegating contractual responsibility while limiting state discretion will make progress in estab lishing property rights. • An earlier version of this paper was delivered at the annual meeting of the American Political Science Association, Chi cago. September 1995 .. The author is grateful for comments from Peter Hall. Joel Hellman. Grzegorz Ekiert, and the par ticipants of the Seminar on Post-Communist Institutions (Russian Research Center). and the Workshop on East European Politics (Center for European Studies). Harvard University.
Topic:
Governance, Industry, Ownership, Post-Communism, and Democratic Transitions
Political Geography:
Europe, Eastern Europe, and Czech Republic