The restructuring process of formerly state-owned enterprises, including dismissal of excess labor, has been slow. Since the recovery of transition economies depends on the restructured sector, a convincing take-off has been delayed. Many arguments have been forwarded to explain the low...

In a model where privatization of inefficient SOE's is performed by allocating shares to different types of agents in society we analyze the conflict between shareholder and stakeholder interests. In particular, some of those that receive shares in a firm that suffers from inefficiency do have a...