We study the effect of management turnover on changes in enterprise perform
ance, using a cross-section of 706 Czech firms over the 1993-1997 period. C
ontrolling for initial conditions, equity holdings by managers, and firm- a
nd sector-specific effects, we find that the appointment of new managers is
associated with improvements in profit margins and labor productivity, par
ticularly if those managers were selected by private owners. The results hi
ghlight the importance of human capital in transition economies in bringing
about improvements in corporate performance, (C) 1999 Elsevier Science B.V
. All rights reserved.