Endogenous ownership structure:factors affecting the post-privatisation equity in largest Hungarian firms

Using a data set for the 162 largest Hungarian firms during the period of 1994-1999, this paper explores the determinants of equity shares held by both foreign investors and Hungarian corporations. Evidence is found for a post-privatisation evolution towards more homogeneous equity structures, where dominant categories of Hungarian and foreign owners aim at achieving controlling stakes. In addition, focusing on firm-level characteristics we find that exporting firms attract foreign owners who acquire controlling equity stakes. Similarly, firm-size measurements are positively associated with the presence of foreign investors. However, they are negatively associated with 100% foreign ownership, possibly because the marginal costs of acquiring additional equity are growing with the size of the assets. The results are interpreted within the framework of the existing theory. In particular, following Demsetz and Lehn (1985) and Demsetz and Villalonga (2001) we argue that equity should not be treated as an exogenous variable. As for specific determinants of equity levels, we focus on informational asymmetries and (unobserved) ownership-specific characteristics of foreign investors and Hungarian investors

A "Simple" Analysis of the Transition to the Market

How should the transition to the market be made? What are the principal difficulties in this transition? How long will it take to surmount them? These questions worry every economist today. It would seem that everything has already been said, that there is not a single idea in the arsenal of economic science that has not in one way or another been brought before the court of society. At the same time, our views of this process are obviously incomplete and inchoate. The details are clear, but there is no picture, especially the part that must be drawn by economic theory.

Social Simulation Models and Reality: Three Approaches

this paper are not less rigorous than economic models and, because they are validated relative to a formal logic rather than mathematics alone, capture much more of the richness of sociological analysis than does the economics approach. Moreover, each has, in its own way, been developed to capture salient characteristics of observed regularities in specific social interactions. Together they exemplify a set of modelling techniques and an integrated methodology which capture the rigour and precision of the economist 's approach to the social sciences while, at the same time, capturing the suggestiveness and richness of the sociologist's approac