Ownership, Exit and Voice after Mass Privatization : Evidence from Mongolia

The success of mass privatization requires either that new owners are active in corporate affairs or that the original owners sell their shares to those who are willing to be active: voice or exit is necessary. We examine the structure of ownership and the extent of voice and exit in one transition country, Mongolia. We document the size of the ownership changes (through mergers, spin-offs, and stock sales) occurring since privatization and examine which owners are changing in importance. We evaluate corporate governance mechanisms, examining patterns of violations of company law and deviations from reasonable criteria for effective governance. We show that ownership changes and the quality of governance are correlated