Ownership, Control and Performance in Large Bulgarian Firms

The paper analyses the key dimensions of ownership structures and their effects on performance in the largest non-financial firms in Bulgaria. We find that direct ownership is highly concentrated and domestic holding companies and nonfinancial firms are the key largest shareholders. The ultimate ownership observed, however, is dispersed due to the dispersed ownership structures of holding companies. This creates specific separation of ownership and control and twofold agency issues. Specific ownership structures like firms affiliated to business groups and firms with offshore owners were also described. We find a positive relationship between ownership and profitability of companies with stable majority private shareholders and negative relationship between state ownership and profitability. The study cannot find support for the proposition about the active controlling role of the second largest shareholders under the Bulgarian conditions. The results show that debt pressure is not an efficient mechanism for constraining managerial discretion in public companies over the period 1998/2001 in Bulgaria.