Performance of IPFs after mass privatization process. Evidence from Russian and Czech mass privatization programs

IPFs were created to facilitate theownership concentration. Extensive literature pointsout that effective corporate governance needsownership concentration. Vishny and Shleifer (1986),Mc Connell and Servaes (1990), Vishny, Shleifer(1997) find a positive relation between ownershipconcentration and corporate performance in US. Theyall argue that diffuse ownership yields significantpower to managers, whose interests do not coincidewith shareholder’s interests. Consequently, managerscould purse non-value maximizing activities such asself dealing, quiet life or empire building. This paperexamines evidence on IPFs in transitional economiesof Czech Republic and Russia.