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The Choice of Privatization Method and the Financial Performance of Newly Privatized Firms in Transition Economies


  • Ranko Jelic,

  • Richard Briston,

  • Wolfgang Aussenegg

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       The authors are respectively from The University of Birmingham – Business School, The University of Hull – Business School and Vienna University of Technology – Department of Finance. They would like to thank an anonymous referee, Laura Casares Field, Mark Schaffer, participants at the Financial Management Association International Annual Meeting in Seattle (2000) and the European Financial Management Association Annual Meeting in Lugano (2001) for their helpful comments and suggestions. Wolfgang Aussenegg acknowledges the research project funding by the Austrian National Bank (OeNB-Jubiläumsfondsprojekt Nr. 8826). He also wishes to thank Reuters GesmbH Vienna for providing data. (Paper received July 2002, revised and accepted November 2002)

1 Ranko Jelic, University of Birmingham, Birmingham Business School, Department of Accounting and Finance, Birmingham B15 2TT, UK.


There is a gap between the theoretical literature which almost unanimously advocates the privatization of enterprises, as part of the solution to the commitment problem in economies in transition, and the empirical evidence regarding the best way to design a privatization program in order to secure an efficient use of resources. This paper contributes to this debate by focusing on the determinants of the financial long-run performance of privatized firms in Poland, Hungary, and the Czech Republic. This long-run performance is mainly influenced by the extent of retained state ownership, the choice of privatization method, and firm size.