Corporate Governance and Equity Prices: Evidence from the Czech and Slovak Republics



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    • World Bank. The opinions expressed do not necessarily represent those of the World Bank. I thank Bob Anderson, Peter Dittus, Roland Egerer, Alan Gelb, Jack Glen, Cheryl Gray, Anil Makhija, Anton Marcinčin, Mitchell Orenstein, Brian Pinto, S. Ramachandran, Moon-Woan Rhee, Nemat Shafik, Dmitri Shemetilo, René Stulz, Sweder van Wijnbergen, an anonymous referee, seminar participants at the World Bank, the University of Amsterdam, and Vanderbilt University for very helpful comments, and Bob Anderson and Anton Marcinčin for assistance with obtaining the data.


The Czech and Slovak Republics' mass privatization scheme used voucher points distributed to the population and a competitive bidding process to change the governance of a large number of firms. Voucher prices and following secondary market prices are shown to depend upon the resulting ownership structures. The more concentrated ownership is, the higher prices are. High absolute ownership by a single domestic investor is associated with even higher voucher prices. I find some evidence that initially prices are relatively lower when a bank-sponsored investment fund has a relatively large stake in a firm. This suggests conflicts of interest.