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crimes and major mistakes: a large-scale privatization of History

1995, there were 1716 companies in the Prague Stock Exchange. Relatively low inflation rate and the employment rate of almost one hundred percent, so this strong macroeconomic position of Central and Eastern European countries making the transition to a market economy seems to be very smooth. But the facts? In early 1999, the number of listed companies plunged 80% or more, only 301 out. 301 observers expected, at least there will be more than a dozen insolvent. Meanwhile, the Prague Stock Exchange 50 kinds of investment value of the main stock index fell 60% accordingly. Trading dried up, the Prague Stock Exchange's own existence is threatened. In 1997, the Exchange 1486 agent, and in mid-1999, only 358 agents. In short, this is a huge market failure.

Why is it so? Most of the investors lost confidence in much the same time, dispersed small shareholders witnessed widespread deprivation of the Czech investment funds, also witnessed in the Czech Republic, once the requirements of any faction occupy the dominant position, it will automatically use a small number of shareholders. Results will be completely lost shares of minority shareholders in favor of other forms of investment. The Czech Republic started to implement large-scale privatization, more than 700 million Czech citizens bought shares through the warrants, but in 1999, the Czech Republic fell to the number of shareholders,
A. Poland and the Czech Republic: Privatization in different ways. From the geopolitical point of view,[link widoczny dla zalogowanych], Poland and the Czech Republic there are many similarities, they have the same Slavic culture, as a former Slavic members of the Group of Central European countries, which also has the same history. But they are a far cry from the way of privatization. The Czech Republic in the early 90s to rush to privatization, for a series of crises and rumors can only ex post control. The Czech government decided to transfer assets of the private sector as soon as possible after the first wave of privatization in the Czech Republic, the 1491 joint stock companies will be privatized, and the second peak in the 861 privatized companies. Therefore, the Czech Ministry of the private gross domestic product

(2) entrepreneurs in order to maximize the value of their shares, they are growing their own companies into the capital market,[link widoczny dla zalogowanych], there is enough incentive to minimize the agency costs (in part through constrained their behavior, or is to limit their own discretion.). In short, because according to Jensen and MeCkling standard corporate model, agency costs entrepreneurs bear, so they do not have sufficient reason to deprive investors of wealth to retain discretion. Therefore, the regulation does not seem necessary. According to this view,[link widoczny dla zalogowanych], public choice (PUBLIC CHIOCE) theory of interest groups and rent-seeking theory to explain why those regulations are still necessary, the best theory.
In short, if the attention is focused only on the common origin of the legal system on top of the two countries will cover a similar ownership structure and market characteristics play a more important role in the functional mechanism different. In addition, despite the recent comparative study of corporate governance structure is impressive, but the study focused on large enterprise level, only visits to corporate law and bankruptcy law, the characteristics that people think that these two laws established the higher investment those protection standards. Although this discussion is important, but it ignores the importance of stock market itself. In the United States and Britain, a significant common feature is that all developed securities markets, and has a high degree of disclosure standards and transparency. Instead of the stock market's success to the common Anglo-American Law on top of it not as the securities attributed to the British and American common law is more obvious on more meaningful. Coupling in terms of generating functions (at least for some of the companies, large), a similar listing of the two countries, disclosure and corporate governance standards than individual shareholder legal remedies that can help even more important. The purpose of this mechanism is to create the credibility of the capital, it actually can be mortgaged to investors, to offset the country-specific defects in the legal system. Finally, the function of securities markets in the legal form of coupling than the coupling of the Company Law to be achieved more easily, not only because large companies can choose between different markets, and because the stock market itself changes the face of global competitive pressures to adapt to Even if the Government to resist this change.

However, even if it proves the role of regulation, but also did not tell us exactly what kind of regulation does (or why) more than the financing of the contract work. It also does not tell us that the best legal system, including the factors. Other exceptions to the common law and civil law also makes the opposition between blurred. For example, that because the legal system of the United States and Britain are derived from the common law tradition, so their system is better, this view ignores a number of relevant historical facts.
It is for these reasons, it merged the functions of the prospect of exploring the more wise. Adhere to the common law into its legal system among countries, it is better to define through a variety of legal mechanisms to obtain a more realistic target function (or the second option.) Based on this idea, this article will briefly describe the transition in the absence of laws for the countries to try to introduce large-scale privatization of the errors lie. Our purpose is not to criticize these early efforts, but to identify common categories. Finally, we do not recommend specific doctrinal principles of transplantation, but transplant priority functions, which is in the overall use of the Anglo-American legal principles is not feasible under the premise of the conclusions.
(1) experienced parties can target their specific situation, formulate a regulatory authority over any desired standard, more detailed, complex and more sensitive of the contract.

recent comparative study of corporate governance structure is clearly focused on economic reforms in transition. In particular, the previous efforts of many scholars in the shell just evolved out of the socialist countries in transition in the implementation of the practical system of corporate governance, and recent research seems to compare precisely the failure of these early efforts and natural expansion. Early experiments quickly showed two strong trends: first, the stock market is very fragile and may collapse. Second, managers and controlling shareholders may be a large scale (and indeed) deprivation of property. The response most of the scholars call for legislative reform is the persistent adoption of Reform might be worth a try, but legislative reform or call for formal legal changes often can not attract attention. In the conformist world, may be just as politically impossible, change is not possible. Even though most people are aware of this transition is valid (from the perspective of Kaldor-Hicks sense), and will lead to substantial growth in the economy.

, however,[link widoczny dla zalogowanych], that the financing contracts largely meaningless to the idea of regulation does not explain why a country's level of development of capital markets and its close relationship between the legal system of the reason. More logical conclusion is that the law does the need for regulation, financing contracts that rely on more than just economic efficiency. Private contracts and can not produce enough to sustain an active stock market information disclosure system.

Securities market failures: the privatization of a minority shareholder rights

A ghost in the new neoclassical corporate finance (Corporate Finance) theory of wandering. This is the ghost of a law-related - that is, empirical theory about the business without taking into account the legal system and explain the variables, then it is imperfect. Recent research on corporate governance found between countries in ownership concentration, capital markets,[link widoczny dla zalogowanych], the value of voting rights and the use of external financing and other issues with the system of difference there. More importantly, these differences appear with the legal protection of minority investors is closely related to the intensity. In turn, this level of legal protection seems to depend on the nature of national legal systems and the origin and change accordingly. Especially in the protection of investors, the common law (COMMON LAW) system goes far beyond the civil law (CIVIL LAW) system (especially the French civil law system). This in turn encourages the growth of capital markets and dispersed ownership. Result, the company appeared in the concentration of ownership and dispersed ownership of two opposite systems, and each system has their different corporate governance structure. If the legal system really relevant, knowledge of such destruction and related shaken neoclassical corporate finance theory. Most modern on costs. On the regulation is unnecessary or that the regulations will make matters worse in the following conclusion is based on two premises:
experience of the Czech legal system is not perfect example of market failure arising from the beginning, investors are still optimistic about the beginning, but later on lost confidence in the Czech market. Thus, although the basis of the macroeconomic conditions in the region within a relatively stable, but the market still fell. Further, the apparent failure of the Czech Republic and Poland experienced its neighbors in sharp contrast. In Poland, the privatization process is carried out slowly, and as a prerequisite, Poland established a fairly good standard of disclosure and governance mechanisms. In a brief review of the experience of these surfaces after the privatization programs in this section will carry out other more general assessment, and discuss the impact of the Asian financial crisis. More articles related to topics：

[link widoczny dla zalogowanych]

[link widoczny dla zalogowanych]

[link widoczny dla zalogowanych]