Privatization in Emerging Economies: An Agency Theory Perspective

By Bavi Dharwadkar, Gerald George, Pamela Brandes. 2000

845 citations recorded by the source corpus.

The ineffectiveness of several privatized firms within emerging economies underscores the importance of agency theory issues and their impact on the privatization-performance relationship. The authors argue that weak governance and limited protection of minority shareholders intensify traditional principal-agent problems (perquisite consumption and entrenchment) and create unique agency problems (expropriation). The authors suggest that postprivatization performance can be enhanced by using appropriate ownership, management, and corporate structures that mitigate agency problems in the context of weak governance, and they highlight avenues for research.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/cc8cfc661e579254d3379e4d3f2968ee9a30140e

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Citations in the corpus

Ownership and operating performance of Chinese IPOs (2005, background): “More recently, La Porta et al. (1999) and Dharwadkar et al. (2000) have challenged the linear relation between ownership concentration and firm performance.”
The Impact of Board Gender Diversity and Foreign Institutional Investors on the Corporate Social Responsibility (CSR) Engagement of Chinese Listed Companies (2019, background): “According to Dharwadkar, George [16], some speciﬁc agency problems related to small or non-controlling interests (NCI) shareholders exist in corporations in China.”
CEO gender, executive compensation and firm performance in Chinese‐listed enterprises (2013, background): “The literature suggests that debt financing should be positively related to firm performance due to banks’ careful selection of projects and firms (Ross, 1977) and the role of debt covenants and monitoring in mitigating agency costs (for review of the relevant theoretical and empirical literature, s”
Internal governance mechanisms and firm performance in China (2009, background): “Consistent with Ding et al. (2007) and Xu and Wang (1997), we do not expect endogeneity to be a problem in the testing of ownership and performance relationship.”
Board of directors, audit committee, and firm performance: Evidence from Greece (2018, background): “managers are less of a concern due a lack of separation of ownership and control compared to developed markets (Dharwadkar et al., 2000).”
State ownership reinvented? Explaining performance differences between state‐owned and private firms (2018, neutral): “Based on agency logic, scholars have pointed out that managers of SOEs are poorly monitored and lack the high-powered incentives normally found in private firms (Dharwadkar et al., 2000; La Porta & Lopez-de-Silanes, 1999).”
Corporate governance reforms in China and India: Challenges and opportunities (2008, background): “Accordingly, effective governance mechanisms include both internal mechanisms, such as the board of directors and its major committees, and external mechanisms such as hostile takeover bids, leveraged buyouts, proxy contests, legal protection ofminority shareholders, and the disciplining of managers”
Guest Editors' Introduction Strategy Research in Emerging Economies: Challenging the Conventional Wisdom* (2005, neutral): “Dharwadkar et al. (2000) argue that these are 'unique agency problems that result from principal-principal goal incongruence'.”
Corporate Governance in Emerging Economies: A Review of the Principal-Principal Perspective (2008, background): “Second, since the agents (top managers) are also (or represent) the controlling shareholders, they are able to circumvent many of the traditional monitoring mechanisms, such as boards of directors (Dharwadkar et al., 2000).”
Current debates in global strategy (2009, neutral): “In terms of the third debate, research on convergence vs divergence must be addressed with time in mind (Dharwadkar et al. 2000; Young et al. 2008).”
Corporate governance and firm value during the global financial crisis: Evidence from China (2012, background): “This suggests 1 La Porta et al. (1999) and Dharwadkar et al. (2000) argue that the greatest source of agency problems stems from controlling shareholders, who expropriate value from minority shareholders.”