The results of ‘mass privatization’in Romania: A first empirical study¹

This paper provides an assessment of the contribution to privatization in Romania of the 1995‐96 Mass Privatization Programme (MPP), which offered shares in nearly 5,000 companies to citizens in exchange for coupons. Analysing a comprehensive database of MPP companies, we find that an average of only 18.7 per cent of these companies' shares were actually transferred to Romanian citizens, and only 7.8 per cent of the companies were majority privatized (on a size‐weighted basis). We estimate that the MPP accounted for only about 5.5 per cent of the value of state‐owned enterprise assets inherited from the socialist period. The design of the programme created highly dispersed ownership structures, which is likely to generate particularly difficult problems in the many small companies in the programme. We place our findings in the context of the history of Romanian privatization policies since 1990, and provide some comparisons with mass privatization programmes in other countries. We also analyse the implications of the MPP for the corporate governance and the restructuring of enterprises.