Efficiency and Ownership of the Czech Firms

In the present paper we analyze evolution of firm financial efficiency in the Czech Republic. Using a large panel consisting of more than 400 thousands Czech firm/years we study whether firms utilize fully their resources, how firm financial efficiency evolves over time, and how it is determined by an ownership structure. We employ a panel version of a stochastic production frontier model in the period 1996-2007 with time invariant efficiency. In that we differentiate among various degrees of ownership concentration and their domestic or foreign origin. In a two-stage set-up we estimate the degree of firms' inefficiency and then we estimate the effect of ownership structure on the distance from the efficiency frontier. Our results support the hypothesis of the concentration and foreign ownership being positively related to the financial efficiency.