engleski

Investment funds and corporate governance in the mass privatization process in Croatia

In the delayed mass privatization in Croatia 471 state(socially) owned companies being of a nominal USD 1.7 billion worth, were transferred by the state to seven privatization investment funds (PIFs) created in 1998. With this transfer, effective control in some 200 companies shifted from the state to the private sector in a large number of boardroom changes. It was concluded, that another 100 companies should at least improve corporate governance through the arrival of board members now representing institutional minority shareholders. By elaborating the problem of corporate governance, the portfolio structure as well as the balance sheets and income statements of the PIFs were analyzed for 1999 and 2000 and it was concluded, that during 1999 and 2000 the PIFs were actively consolidating their portfolios mostly through swaps with the Croatian Privatization Fund or among each other, creating a bubble of market activity on Croatian OTC financial market. However, there was hardly any visible sales activity of portfolio shares to outside buyers. It was found out that one of the main reasons for this dilatory start of the final restructuring of ownership into private hands might be the original delay of share ownership transfers to the PIFs from Croatian Privatization Fund. But mostly it appears to be the general lack of liquidity in the Croatian capital market and in the economy as a whole.

investment funds; corporate governance; mass privatization; enterprises; restructuring

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