Endogenous ownership structure: factors affecting the post-privatisation equity in largest Hungarian firms

Kate Bishop, Igor Filatotchev, Tomasz Mickiewicz

Research output: Contribution to journalArticle

Abstract

Using a data set for the 162 largest Hungarian firms during the period of 1994-1999, this paper explores the determinants of equity shares held by both foreign investors and Hungarian corporations. Evidence is found for a post-privatisation evolution towards more homogeneous equity structures, where dominant categories of Hungarian and foreign owners aim at achieving controlling stakes. In addition, focusing on firm-level characteristics we find that exporting firms attract foreign owners who acquire controlling equity stakes. Similarly, firm-size measurements are positively associated with the presence of foreign investors. However, they are negatively associated with 100% foreign ownership, possibly because the marginal costs of acquiring additional equity are growing with the size of the assets. The results are interpreted within the framework of the existing theory. In particular, following Demsetz and Lehn (1985) and Demsetz and Villalonga (2001) we argue that equity should not be treated as an exogenous variable. As for specific determinants of equity levels, we focus on informational asymmetries and (unobserved) ownership-specific characteristics of foreign investors and Hungarian investors.
Original languageEnglish
Pages (from-to)443-471
Number of pages29
JournalActa Oeconomica
Volume52
Issue number4
DOIs
Publication statusPublished - Dec 2002

Fingerprint

Large firms
Ownership structure
Factors
Privatization
Equity
Foreign investors
Owners
Ownership
Marginal cost
Informational asymmetry
Foreign firms
Exogenous variables
Firm size
Investors
Assets
Foreign ownership
Exporting

Bibliographical note

The archived file is not the final published version of the paper
Bishop, K., Filatotchev, I., & Mickiewicz, T. (2002). Endogenous ownership structure: factors affecting the post-privatisation equity in largest Hungarian firms. Acta oeconomica, 52(4), 443-471.
http://dx.doi.org/10.1556/AOecon.52.2002.4.3

Keywords

  • Hungary
  • foreign investors
  • corporate control
  • ownership structure
  • privatisation

Cite this

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Endogenous ownership structure : factors affecting the post-privatisation equity in largest Hungarian firms. / Bishop, Kate; Filatotchev, Igor ; Mickiewicz, Tomasz.

In: Acta Oeconomica, Vol. 52, No. 4, 12.2002, p. 443-471.

Research output: Contribution to journalArticle

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