اقتصاد سیاسی مالکیت دولتی باقی مانده در بنگاه های خصوصی: شواهد حاصل از بازارهای نوظهور

We investigate the political determinants of residual state ownership for a unique database of 221 privatized firms operating in 27 emerging countries over the 1980 to 2001 period. After controlling for firm-level and other country-level characteristics, we find that the political institutions in place, namely, the political system and political constraints, are important determinants of residual state ownership in newly privatized firms. Unlike previous evidence that political ideology is an important determinant of privatization policies in developed countries, we find that right- or left-oriented governments do not behave differently in developing countries. These results confirm that privatization is politically constrained by dynamics that differ between countries.

Privatization can be defined as the deliberate sale by a government of state-owned enterprises (SOEs hereafter) or assets to private economic agents. This shift of ownership — and control — to private owners creates a change in the prevailing incentive structures, and puts greater emphasis on profits and efficiency (Boycko et al., 1996 and Shleifer and Vishny, 1997). The literature provides strong evidence on the dividends of privatization and the benefits derived from private ownership as compared to government ownership (e.g., Megginson et al., 1994, Boubakri and Cosset, 1998, Boubakri et al., 2005b, Boubakri et al., 2005c and D'Souza et al., 2005).1 The evidence also suggests that performance is negatively related to the government's continued role in the firms. For example, in their research on a set of emerging markets, Boubakri and Cosset, 1998 and Boubakri et al., 2005c find that there is greater improvement in performance after privatization, which is more pronounced when the government relinquishes its control rights. These conclusions are echoed by Chhibber and Majumdar (1999), who find that privately owned firms in India are more efficient than those under mixed ownership or those run as SOEs. Shleifer and Vishny (1994) conjecture that when politicians maintain control over firms, privatizing cash flow rights will only reduce efficiency and increase corruption. According to this argument, to ensure successful privatization, the immediate transfer of control rights should be of primary importance ( Boycko et al., 1996). 2 In practice, however, privatization does not always seem to follow this idealized model, especially in developing (non-transition) economies. In an evaluation of the privatization experience of developing countries over the 1988 to 2005 period, Boubakri et al. (2008a) show that instead of immediately divesting all of their ownership, most governments divest only partially over time. Boubakri et al. (2005b) provide further evidence on this phenomenon in a study of the evolution of post-privatization ownership structure in a multinational sample of 209 firms, mostly from emerging markets. They report that while privatization does lead to a drastic change in the ownership structure of SOEs, the transfer of ownership is mainly conducted through partial, staggered sales. Consistent evidence is also found by Gupta (2005), who shows that in India most privatization transactions are partial sales that leave the government in control, and by Fan et al. (2007), who show that in China the government is prohibited from selling its controlling stake in SOEs, which are thus privatized gradually by selling shares to minority investors.3 A possible rationale for continued government influence following privatization is provided by the theoretical model of Perotti (1995), who argues that partial privatization can signal the government's commitment to market-oriented policies. By relinquishing their control rights, governments signal that privatization is credible and implies no policy risk (i.e., risk of interference in the operations of newly privatized firms — NPFs hereafter — either through regulation or renationalization). By retaining residual ownership, governments thus signal their willingness to share in any remaining policy risk. As a result, and according to Perotti's (1995) model, partial privatization is a political choice that depends on the characteristics of the government in place, that is, on political institutions. Based on this model, Biais and Perotti (2002) show that right-wing governments, whose objective is to ensure their re-election, signal their commitment to the median voter through partial privatization and underpricing. Similarly, Jones et al. (1999) show that the terms of share issue privatizations — allocation and pricing — are structured to achieve political and economic objectives. The purpose of this study is to determine how political institutions influence post-privatization control structure in a large set of emerging markets. Our analysis consists of two parts. First, using hand-collected firm-level data, we examine the residual control of privatizing governments using four measures of control: direct ownership, ultimate ownership, golden shares, and political connection. To our knowledge, this is the first study to document, using firm-level data, residual state control in emerging economies along these various dimensions. We find that residual state ownership over a window of up to six years following privatization shows a significant decline. However, the speed with which governments relinquish control appears to differ across industries and regions, and the state remains the controlling owner (holds more than 50% of the shares) in 46% of our sample firms. We further find that the method of privatization is correlated with residual state ownership; for instance, share issues on the stock market are associated with more gradual divestitures. In addition, governments tend to retain indirect control over NPFs through political connections (30.3% of our sample firms), and less frequently through golden shares (7.3% in our sample firms), which contrasts with Bortolotti and Faccio (2009), who document that 62.5% of a sample of OECD firms have golden shares (in 1996). The second part of our analysis focuses on the impact of political governance on post-privatization control structure. More specifically, we assess how political constraints and institutions influence the government's residual ownership in the six years following privatization. Motivated by prior research, we conjecture that as a redistributive policy, privatization is politically costly and hence is necessarily constrained by the strength of checks and balances, by government ideology, and by the political system in place. Our multivariate analysis, which controls for other potential factors influencing privatization design and corporate ownership structure, shows that the decline in state ownership is indeed associated with a country's political environment. For instance, residual state ownership is higher in parliamentary systems and under regimes with greater constraints on the executive (checks). Contrary to what is documented for OECD samples, however, the ideology of the executive does not appear to affect residual ownership. These results are robust to several additional tests, and taken together suggest that it is important to control for a country's political environment and legal infrastructure when assessing the corporate governance of NPFs. Our paper makes two primary contributions to the literature. First, our study extends prior work on the political determinants of privatization. Previous studies in this line of the literature focus largely on the country-level design of the privatization process. 4 For instance, Bortolotti and Pinotti (2008) conduct a country-level investigation of the determinants of privatization for 21 advanced OECD economies, and show that the likelihood and extent of privatization are strongly positively associated with majority-rule political systems. Bortolotti and Faccio (2009) provide related evidence on the determinants of the control structure of OECD-country NPFs for the period 1996 to 2000. However, by limiting attention to advanced economies, these papers' results may not generalize to emerging markets, where the public sector is relatively larger, where political institutions tend to exhibit less accountability, and where executives are less constrained and thus enjoy more latitude in decision making ( Bortolotti et al., 2004 and Klapper and Love, 2004). Earlier studies by Bortolotti et al., 2001 and Bortolotti et al., 2004 consider both developed and developing countries over the period from 1977 to the mid-1990s and, using country-level data, examine the determinants of the decision to privatize, the method of privatization, revenues from divestiture, and the ownership share sold over the sample period. Yet while Bortolotti et al., 2001 and Bortolotti et al., 2004 samples include 17 emerging countries, these countries account for less than 20% of their observations. Developing countries exhibit particular dynamics likely to affect the way privatization is implemented. 5 For example, political risk factors have more of an effect in developing countries than in developed countries ( Boehmer et al., 2005). 6 To the extent that these factors affect government residual ownership, they are more likely to explain privatization outcomes in developing countries than samples based largely on developed markets may uncover. In this paper we extend this literature by using hand-collected firm-level data, running firm-level (in addition to country-level) analysis, considering indirect means of government control, namely, golden shares and political connection, and focusing exclusively on developing countries (27, from four geographical regions). Further, unlike Bortolotti and Faccio (2009), who consider the years 1996 to 2000 for all privatized firms regardless of their year of privatization, we examine the six-year window immediately following divestiture, when the influence of political factors is most likely to be strong. Second, our study tests hypotheses related to two strands of literature. The literature on the political economy of privatization posits that government commitment to market-oriented policies can be signaled by partial privatization ( Perotti, 1995), and that right-wing-oriented governments, which are typically more committed and less fiscally constrained, favor less state control in the economy and hence divest control more quickly ( Biais and Perotti, 2002). The literature on the political determinants of corporate governance argues that a country's legal institutions are the product of choices made by politicians ( Pagano and Volpin, 2005), but that ownership structure and concentration are determined by the nation's political orientation rather than the prevailing legal institutions ( Roe, 2003). By showing that a country's political institutions explain post-privatization ownership structure over and above the role played by its legal institutions, we bridge these two literatures and add to previous evidence in Boubakri et al., 2005b and Guedhami and Pittman, 2006, who show that the quality of a country's legal institutions shape post-privatization ownership structure at the firm level. The remainder of the paper is structured as follows. Section 2 develops our hypotheses on the relation between privatization design and political institutions. Section 3 discusses the data and the variables used in the study. Section 4 documents the post-privatization evolution of ownership structure and investigates its determinants. Section 5 summarizes our findings and concludes the paper.

In this paper, we use a political economy framework and a unique database to investigate the control structure of 221 privatized firms from 27 emerging markets over the 1980 to 2001 period. We find that the control structure of privatized firms in emerging countries differs from that of firms privatized in OECD countries, as observable (direct) government ownership is not significantly different from the government's ultimate ownership, owing to the fact that most privatizations are gradual and do not involve a transfer of control rights. In country-level regressions we find that political factors can shape residual state ownership, as predicted by prior privatization theory (e.g., Perotti, 1995 and Biais and Perotti, 2002) and empirical evidence on share issue privatization design (e.g., Jones et al., 1999). More specifically, the results show that the type of political system (e.g, parliamentary and presidential), and the degree of political constraints (e.g., checks and balances) are significant determinants of residual state ownership in NPFs even after controlling for the influence of the legal environment. For example, residual state ownership in NPFs is higher under parliamentary systems than under presidential systems. In addition, consistent with extant arguments in the political economy literature (Alesina and Drazen, 1991), we find that when political constraints and the power of veto players are higher, they limit the ability of governments to put in place market-oriented reforms such as privatization. Facing such constraints, the government is more likely to privatize slowly, divesting small stakes in a sequence of sales over time. Our measure of political constraints is thus positively related to residual government ownership. Throughout our analysis, however, the ideology of the executive appears to be insignificant, a result that contrasts with theoretical arguments in Biais and Perotti (2002) and empirical evidence based on OECD countries that support the view that government control is significantly determined by the ideology of the executive (Bortolotti and Faccio, 2009). Our results are robust to a battery of robustness checks and alternative proxies for our dependent and explanatory variables, and taken as a whole suggest that privatization dynamics not only differ between developed and emerging markets, but also within emerging markets.