Insider Ownership and Firm Performance: Evidence from Bulgaria

By using panel data for a sample of Bulgarian manufacturing firms we investigate the impact of the privatization process. All sample firms started under state control and many were privatized during the study period. Our rich data enable us to use and estimate a number of specifications to rigorously analyze the impact of privatization, and in particular insider privatization. Contrary to mainstream theory (e.g., Boycko, 1996) and the findings of an influential empirical survey (Djankov & Murrell, 2002), our results show no difference on firm performance for insider versus other methods of privatization. As such our findings more nearly support those of other studies for Bulgaria (e.g., Miller & Lazorov, 2011; Jones, Rock, & Klinedinst, 1998) and selected studies for other transition countries (e.g., Jones & Mygind, 1999 for Estonia).