The determinants of firm performance after ownership transformation in Slovenia

Abstract

In the last decade there has been an extensive debate in transition countries on whether ownership matters for company performance. The key issue has been whether outsider ownership outperforms insider ownership. This paper examines the influence of several variables — insider ownership, ownership by the state and municipalities, market share and the share of exports — on company performance in a sample of 488 Slovenian industrial companies after their ownership transformation. Econometric estimations demonstrate, contrary to the expectations based on previous Slovenian studies, that insider ownership does enhance performance. Market share has the expected positive influence on value added, whereas the influence of exports is negative due to the export reorientation to Western markets and the exchange rate policy in 1998. The effect of state ownership is statistically insignificant.