Ownership structure, corporate governance and asset prices evidence from the czech privatisation : four essays

Abstract

Firms demand capital and suppliers of capital, i.e. firms owners, demand return on their sunk investment. If managers and owners shared the same objectives, or were able to specify perfect contracts, firms would have good access to capital and owners satisfying returns. In real word, however, managers and owners interests differ significantly, and contracts are imperfect. This is a potential source of company bad performance, low returns on equity participation and bad access to capital. Corporate governance mechanisms, that specify relations between managers and owners, set cost of capital and thus performance of firms and economy. Theoretical literature tends to agree that ownership structure itself matters for corporate governance. This relation is very difficult to test empirically, because ownership structure does not change often enough to allow for testing. The opportunity for empirical research appeared with mass privatisation programs in Eastern Europe, where huge number of firms changed their ownership structures fairly quickly and in different directions. Therefore, in this thesis we decided to use data on the Czech Republic, which succeed to privatise thousands of firms during a five-year period. We use information from privatisation process and later generated information from stock market and about mutual funds.