A0761
Title: On rushed privatizations
Authors: Jan Hagemejer - Narodowy Bank Polski (Poland) [presenting]
Joanna Tyrowicz - University of Warsaw (Poland)
Jan Svejnar - Columbia University (United States)
Abstract: The aim is to provide the first analysis of whether rushed privatizations, usually carried out under fiscal duress, increase or decrease efficiency and scale of operation (size) of firms. Using a large panel of firm-level data from Poland over 1995-2015, we show that rushed privatization has negative efficiency and scale effects relative to non-rush privation. The negative effect of rushed privatization on the scale of operations is even stronger than its negative effect on TFP. We also find that the negative relative effect of rushed privatization grows over time. A variety of modern econometric methods is used in order to deal with selection problems and endogeneity. We apply propensity score matching in order to account for selection of ex ante better firms for privatization as well as to account for the differences between firms privatized in rush and non-rush years. We use a double difference in difference identification strategy to disentangle both the treatment effect of privatization as well as the difference between effects of privatization in rush versus non-rush years. Last but not least, we also use a regional political instrumental variable to account for endogeneity of the privatization process. Results are robust and stable across specifications.
