Emerging Owners, Eclipsing Markets? Corporate Governance in Central and Eastern Europe

New comparable data on ownership and control and financing patterns shows that the emerging capitalist systems in Central and Eastern Europe share many features. While the extent of remaining government ownership differs from one country to another, private ownership dominates everywhere. Ownership and control are becoming increasingly concentrated, with the emergence of corporate groupings and significant foreign owners in most countries. The emerging ownership and control structures have important implications for corporate governance. The fundamental tradeoff is between providing incentives to entrepreneurship and protection of minority investors. Our main message is that ownership and control is and will remain concentrated for the foreseeable future, and regulatory intervention should focus on eliminating outright fraud while maintaining the incentives for entrepreneurship and large shareholder monitoring. In particular, there is a strong need to make the emerging control structures and what controlling owners do more transparent.