Continuity Under a Different Name: The Outcome of Privatisation in Serbia

Abstract

Normally, privatisation is seen as beneficial. In the case of Serbia, the results are disappointing. This paper considers the failure of privatisation in Serbia-a latecomer in the matter-where privatisation was partly a result of exogenous pressures. In Serbia, a sizeable number of privatised firms were bought by bureaucrats and politicians and all firms were subjected to a period of supervision. We argue that this process of privatisation was designed to allow rentseekers to conserve their privileges through asset stripping and that this explains the failure. In order to do so, we perform empirical analysis of the determinants of liquidation, merger and bankruptcy of privatised firms from 2002 to 2015. We construct a novel data set from primary sources, free of the 'survivorship bias' and containing proxies for various types of owners, indirect signs of asset stripping strategy and a broad range of controls. Our results indicate that firms owned by politicians face significantly higher risks of bankruptcy, especially after the end of supervision.

It's a man's world? The rise of female entrepreneurship during privatization in Serbia

“…The economic transition from the planned economy to a market one in Serbia was rather slow and privatization was conducted later than in other countries. Poor economic conditions and loopholes in legislation (Ivanović et al, 2019) to a certain extent spoiled the outcomes of privatization. De jure the privatization framework and the related formal institutions provided equal chances for both men and women.…”

“…For the given research questions we used the dataset from Ivanović et al (2019). The original sources of the data are the Databases of Serbian Business Registers Agency (APR), Bankruptcy Supervision Agency (ALSU) as well as privatisation contracts by Privatisation Agency (AP).…”

“…The development of formal institutions was not only sluggish, but also associated with the emergence of gaps and loopholes in the legislation (Ivanović, 2015), which jeopardized privatization. Although the main waves of privatization took place during 2002-2008, the legislative framework wasn't mature enough to confront issues to asset-stripping and rent-seeking (Ivanović et al, 2019).…”

“…Privatisation process brought significant losses: in the aftermath, almost 50% of the privatized firms disappeared resulting in thousands of lost jobs. The loopholes in broader institutional context and excessive rent-seeking consist the main part of explanation for such an outcome (see more by Ivanović et al, 2019;Denisova et al, 2012;Vujačić and Petrović-Vujačić, 2011;Cerović and Mitrović, 2007). In the context of gender issues, the legislative framework was de jure gender neutral.…”

Doing business while holding public office: Evidence from Mozambique’s firm registry

“…For example, Lamberova and Sonin (2018) use network analysis to document a significant association between the wealth of businessmen and their closeness to the inner circle of the incumbent leader. And Ivanović et al (2019) show that Serbian firms privatized into the hands of politicians were more likely to subsequently file for bankruptcy, having been stripped of assets.…”