Discussion Paper Details

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Title: Ownership and Corporate Control in Poland: Why State Firms Defied the Odds

Author(s): Brian Pinto and Sweder van Wijnbergen

Publication Date: December 1995

Keyword(s): Corporate Control, Corporate Governance, Privatization, State Enterprises and Transition Economies

Programme Area(s): International Macroeconomics

Abstract: We present evidence of major adjustment efforts in the State sector in Poland well before privatization. Extensive survey evidence is used both to establish this point and to find an answer to the question why managers instigated such reforms in spite of the absence of an effective ownership structure. We find both the government and, importantly, commercial banks, exercised strong governance: the government through its refusal to give open-ended subsidies and a tax-based wage policy, the effectiveness of which we establish using econometric techniques; and the banks through their discretion in allocating new funds. We also show that banks started to discipline their borrowers only after strong governance reforms for the banks themselves were instituted.

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Bibliographic Reference

Pinto, B and van Wijnbergen, S. 1995. 'Ownership and Corporate Control in Poland: Why State Firms Defied the Odds'. London, Centre for Economic Policy Research.