The Effect of Enterprise Break-Ups on Performance. The Case of the Former Yugoslav Republic of Macedonia

The transition literature on the comparison of restructuring prior to privatization has been theoretically well researched, yet the empirical evidence is limited. Virtually no study has dealt with the Macedonian economy at all. Using firm level data, we estimate the effects of the break-ups of enterprises on the subsequent performance of the ?master enterprises? and spun-off divisions. We estimate the performance effects by comparing the performance of enterprises that remained intact with the performance of enterprises that experienced spin-offs and the newly established subsidiaries. Our results suggest that the break-ups were guided not by efficiency goals, but rather by managerial self-interest.