Equality, Participation, Transition: Essays in Honour of Branko Horvat

168 Privatization: Evidence from Estonia
10.4 Data and ownership patterns
An important strength of our study is the use of rich new panel data
for a large sample of firms. With the cooperation of the statistical
authorities, annual economic and financial data were extracted from
company records for 666 firms for the period 1993–7. These standard
economic data (for example profits, assets and employment) have been
merged with special surveys that collected detailed data on ownership
at the time of privatization and for three years during this period. 9
It is important to stress that these data enable us not only to estimate
diverse specifications, but also to construct measures of key variables
that often improve on those used in previous studies. Since there
is much disagreement over the relevant analytical categories to use
with which to describe patterns of ownership (especially the dynamics
of these processes), questions were included in the surveys in order to
provide for several options. In particular, information on the extent of
ownership for major ownership groups (managers, non-managerial
employees, foreigners, domestic outsiders, and the state) was collected
on an annual basis from 1995 to 1997. Thus, we are able to classify
firms by either dominant or majority ownership (compared to most
studies that use only dominant share, for example, Frydman et al.,
1997; Jones, 1998; and Earle et al., 1996). In addition, some information
was collected on the dispersion of ownership within firms which
enabled us to construct other measures – for example, the extent of
inequality of ownership within insider-owned firms and also the percentage
of employees who own shares.
When the economic and ownership data for the sample of 666 firms
were merged, sufficient data were available to enable ownership structures
to be analyzed on 601 firms from 1995 (the first year for which
detailed annual data on ownership and economic data were collected)
through to 1997. 10 Examination of these data (reported in Jones and
Mygind, 1998) reveal that there is enormous variation across Estonian
firms in their ownership structures. Thus, there are examples of firms
in which majority ownership lies with insiders (in some cases, employees,
in others, managers) and also firms in which the majority owners
are outsiders (in some cases, foreigners, in other instances individuals
who do not work in the firm.) At the same time, there have been
important changes in ownership configurations, in the sense of who
the majority owner is. Equally, there is much inertia – more than three
in four privatized Estonian firms did not switch their ownership category
during a three-year period.