A New Instrument for Measuring the Local Causal Effect of Privatisation on Firm Performance
A New Instrument for Measuring the Local Causal Effect of Privatisation on Firm Performance

Summary/Abstract: Despite an apparent consensus in the literature that privatisation universally leads to an increase in firm performance, the problem of endogeneity bias is profound and has been emphasised in a number of meta-analyses. We propose a new instrument to address the endogeneity bias and apply it to Polish medium-sized and large firms in the period of 1995 to 2008. We find that improvements in firm performance are not universal; in particular, we find no improvement among manufacturing firms privatised to domestic investors.

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