| Summary: | May 2000 - Does private ownership improve on corporate performance in a developing institutional environment? In Lithuania commercial transfer of state property to private owners has significantly improved enterprises' revenue and export performance. Grigorian presents some evidence of improved corporate performance in Lithuania for the period 1995-97. His question: Were these improvements in any way caused by privatization and changes in the environment in which enterprises operate? He presents evidence of correlation between ownership and enterprise performance as measured by increased revenues and improved export performance. Controlling for preselection bias increases the magnitude and significance of private share ownership, which indicates negative selection bias at privatization. On the other hand, (expected) subsidies seem to contribute negatively to enterprise performance. However, the study finds no clear evidence of the effect of market competition on performance indicators in the short run. Grigorian's is the first study to analyze the consequences of commercial (as opposed to mass) privatization in Central and Eastern European countries. This paper - a product of the Private and Financial Sectors Development Sector Unit, Europe and Central Asia Region - is part of a larger effort in the region to study enterprise restructuring in transition. The author may be contacted at dgrigorian@worldbank.org
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