4 state, shares vary between 0% and 84%. The correlations between the relative shareholdings of the various classes are all negative, suggesting that these classes are indeed separate and economically meaningful different owners.

Detailed data on ownership of individual firns by investment funds is provided in Mejstrik et al. (1994). The Czech and Slovak Republic Company and Investment Funds Acts restrict the investment funds from owning more than 20% of the equity of a given firm (see Coffee, 1994).4 It appears that this constraint is only mildly enforced in practice. Orenstein (1994) reports, for example, that several investment funds in Slovakia exceed this limit. Nevertheless, a single fund is unlikely to have an absolute majority (more than 50%) stake in a given company. Analysis by Mejstrik et al. (1994) confirms this: for none of the 949 firms they analyze has any single fund more an 40% of equity and only for 9 firms has a single fund more than 30%. Analyzing the larger group of investment fund holdings in 1491 Czech and Slovak firms, I find a similar result. The highest share of a single firm's equity owned by a single fund _(top))_ is 32.44%, and for only two firms does a single fund own more than 30% (Table 1).

Effective Control The effective control a given investor may have over a fim depends not only on the fraction of the shares she owns, but also on the distribution of the shares of other owners. In an extreme case, an investor with only a very small fraction of shares, e.g., 10%, could have effective control over the firm if the rest of the shares were widely-distributed among the firm's remaining shareholders who do not collude. Mejstrik et al. (1994) analyze then also the degree of effective ownership for a sample of 919 firms. They do this by calculating the ownership of each investor relative to the overall ownership of 18 strategic investors.<sup>5</sup> They define a situation of effective control as a case where the equity held by a single strategic investor is more than 50% of the equity held by all (18) strategic investors. They find that one single fund can control 146 fims, two funds 473 firms and three funds 669 firms. This indicates that the funds could have much more effective control than their nominal shareholdings suggest.

Extending this approach to the larger sample of 1491 Czech and Slovak firms and using four strategic investor classes (the state, domestic and foreign investors, and the top 10 investment funds for a given fimn), indicates that one single fund could control 273 firms _(controldl),_ two funds 739 firms _(controld2)_ and three funds 1013 firms _(controld3,_ Table 2). In other words, for about half of the firms, two investment funds effectively control the firm (of course, these are not the same two funds for all firms). When all shares held by the state are 'To prevent evasion through the use of multiple funds controlled by the same investment company, a further restriction is that the assets of all investment funds established by a single, individual investment company cannot represent more than 20% of the shares of the same issuer.

5They define the 18 strategic investors as direct domestic or foreign investors, the National Property Fund (through temporary, permanent, and restitution share holdings), shares to be transferred to municipalities, shares to be sold through banks, shares not (yet) sold, and the top 10 investment funds for the firm in question.