THE IMPACT OF CZECH PRIVATIZATION METHODS ON ENTERPRISE PERFORMANCE INCORPORATING INITIAL SELECTION-BIAS CORRECTION

Governments with transitional economies have applied different privati zation methods, from an almost free distribution to the direct sale of state assets. While a free distribution was believed to ensure the po litical feasibility of the programme and its fairness, direct sales, ( or more generally, standard privatization methods) had a significant a dvantage in creating concentrated ownership structures as the prerequi site to corporate control and restructuring. Many economists believe t hat the two goals of mass privatization, political feasibility and the creation of proper ownership incentives, contradict each other and re cent empirical comparisons of enterprises seem to support this view. H owever, all empirical works have been based on the weak assumption tha t privatization methods were applied on a randomly selected sample of enterprises, which then allowed for a direct comparison between these enterprises. Our main claim is that governments actually selected ente rprises non-randomly and therefore, the resulting selection-bias must be incorporated into the analyses. To show this, we apply a Heckman tw o-step regression method on a sample of 559 Czech enterprises. The mai n point of this paper then is that performance is influenced by the se lection process and that the combination of vouchers with outsider own ers is preferred over 100 per cent voucherization.