Grant for project: Lisbeth la Cour.

Long describtion:

Firm productivity is expected to be affected by trade liberalization. Faced with higher competition, firms get under pressure to increase their productivity and to insure their survival by cutting down the managerial slack and by investing in innovation. The positive effect that increased competition exerts on firm efficiency is likely to be weaker in firms where managers are not effectively monitored and are free to pursue own short term goals. The extent to which managers are monitored by owners depends on the level of ownership concentration: in companies with dispersed ownership, rewards from costly and effort demanding monitoring activity are small. Consequently we expect that the impact that increased openness has on firm productivity depends on ownership structure. So far this fact has not been investigated in the literature. The current project will empirically address this issue by using financial and ownership data on Czech firms. The Czech transition process is a unique natural experiment, where increased openness has been accompanied by firm privatization. Our results should have direct policy implications. We should be able to identify the conditions under which increased openness brings high benefits. The expected results are highly relevant in the view of further EU enlargement to countries that are still in the early stages of their transition process. This study is likely to be the first one in a row of theoretical and empirical studies that address this issue.

Projectperiod 2007-2009:
Bevilling: 1,15 mio