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We study the effects of different modalities of privatization to insiders on the restructuring process in two former Soviet republics ‐ Georgia and Moldova ‐using enterprise survey data for 1995‐97. Enterprise restructuring was similar in companies where incumbent managers received significant ownership stakes for free and in state‐owned companies. In contrast, the restructuring process was faster in companies bought by their managers. We interpret these results to suggest that managers' incentives to restructure decrease when they perceive their newly acquired ownership as a windfall gain.
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Simeon Djankov (1999) studied this question.
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