Ownership and Control in Large Eastern European Companies

The aim of this paper is to determine if the ownership structure of large Central Eastern-European companies, can influence the performance of the companies via better monitoring and control of managers done by individual blockholders. We use a sample of 497 large private and public CEE companies and analyze influence of large individual type of blockholders on performance over the period 2004-2013. We use ROA as a proxy for performance, firm, country characteristics and ownership indicators in a fixed-effect panel model. Our estimates indicate that only state and foreign ownership can influence performance while individual and widely held ownership do not influence performance in large CEE companies. On average, state controlled companies tend to underperform while foreign ownership seems to be beneficial for performance. This suggests that ownership can be used as a substitute for missing good governance institutions, in such a specific environment as CEE countries