Privatization, Shareholding and Efficiency Arguments

This paper addresses a major and yet under-researched issue of the disciplinary mechanism in corporate systems of transition economies with a particular emphasis on Russia. The importance of this issue follows from the fact that privatization and hence creation of corporations is the core process in the institutional restructuring in the economies of Central and Eastern Europe and the CIS. The successes of privatization in terms of the absolute decrease in the number of state-owned enterprises and the growing share of privatized firms in GNP are often interpreted as the most important indication of advance towards a market economy. This has important practical implications too. For instance, progress in privatization is an important element of conditionality on assistance provided by international financial institutions (Ners, 1995).