In the literature on privatisation and restructuring it is a generally held belief that manager owned ﬁrms will be restructured more rigorously than worker owned companies. This gives the clear recommendation that property rights and control rights should be allocated to managers in the process of (insider-privatisation. One of the implied arguments is, that managers' career concerns will make them eager to prove their ability by improving company effciency. The present model shows that in the transition context managers' career concerns might result in the opposite effect. If the bulk of job opportunities are in worker controlled ﬁrms, the managers of the few manager controlled ﬁrms will want to appear soft on excess labour capacity - hence, restructure less harshly - in order to improve their career opportunities.
Economic Change and Restructuring, 2003, Vol 36, Issue 4, p. 333-349
career concerns; insider shares; manager incentives; privatisation; restructuring; transition