Ownership Competition in the European Transition Arena: Towards a Viable Restructuring?

One of the main goals of the European authorities is to promote common patterns of corporate restructuring by protecting the interests of holders of the securities of public companies from member States. Within the context of European integration, the new ascending countries have adapted corporate governance principles, including takeover regulation, in order to address both the question of economic growth and that of agency conflicts arisen in fully- or partially-privatized companies. Using data on Croatian and Romanian listed firms over the 2000-2003 period, we show that the ownership concentration has an asymmetrical effect on economic performance, which is conditioned by the initial structural conditions prevailing in those countries. Particularly, the Croatian companies' resources seem better managed if there are many large shareholders comparable in size, while Romanian companies perform better if the holdings of the largest shareholder are important relative to those of remaining shareholders. However, the relation between corporate governance variables and firm performance depends on a firm's characteristics, as well as on macroeconomic environment.