The Process and Impact of Privatization in Russia and Ukraine

Abstract

Differing in pace and scope, privatization in Russia and Ukraine has resulted in insiders usually dominating the ownership structure. Despite following a “giveaway” distribution of shares, Russia more than Ukraine favors outside investors. Russian managers, more so than their Ukrainian counterparts, have assembled larger shareholdings at the expense of other employees. Surveys were conducted of enterprise perceptions to see if either Ukraine corporate governance benefited from a late start, or whether Ukraine provides an example of successful resistance to reform from an old regime, resistance that Russia tried to avoid. The balance of evidence favors the latter.