ABSTRACT

Seventeen years after the dawn of postsocialist economic transformation, corporate governance structures are extremely different across CEEC and CIS members. The observed differentiation is basically due to the variety of methods that have been used to privatize former State-Owned Enterprises (SOEs). The growth of the de novo private sector and its mushrooming start-ups as well as residual state property also had an unevenly important impact on governance structures from one postsocialist economy in transition (PET) to the other. In new private start-ups a strong corporate governance structure (being monitored entirely by a single or a few owner(s)) tends to prevail while in privatized fi rms (that is, former SOEs) a managerial corporate control is widespread. A privatized enterprise in CEEC today is basically a managerial fi rm. In our country sample, corporate governance structures change slowly since the emerging capital markets are not yet functioning properly and the set of appropriate institutions is not comprehensive and not strictly enforced. Over one decade after privatization has begun, the different corporate governance structures in CEEC can be represented by four stylized models: foreign capital controlling stake, managerial control (sometimes with the co-operation of banks), an outsider-insider coalition governing the enterprise, and a peculiar ‘employee and start-up’ governance. In recent years, some converging tendencies toward an ‘average’ Central Eastern European model of corporate governance have shown up; its two major pillars are strong foreign investor control over big corporations combined with strong governance by a single owner over genuine SMEs.