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# 3. Results

Variables Finally Used I relate equity prices of individual finms to various ownership concentration variables and other, controlling variables. Shafik (1994b) and Mejstrik (1994) have estimated price equations for voucher and PSE prices and provide some suggestions for right-hand side variables, beside the ownership variables. I use the ones they report and add other ones. The following variables are significant in one or more of the three price series: the growth rate of output of the firm between 1989 and 1991 _(outg),_ the book value of equity _(bookva),_ employment in 1991 _(emplo9l),_ profit in 1991 _(profil9l),_ equity per employment _(equ_ep),_ profit per output _(pro_out),_ employment per output _(enmp our),_ the squared employment rate (to account for possible non-linearities, _emplo2),_ dummies for sectors (construction, _dumco,_ and services, _dumse),_ and a dummy for a region (West Bohemia, dumwb). Shafik (1994b) and Mejstrilc (1994) already provide possible explanations why these variables are significant. Table 4 presents the mean and standard deviation statistics for these variables as well as the matrix of cross-correlations. Size _(bookval_ and _empto9l,_ which are highly correlated) has a negative effect on prices. As employment squared has a positive sign, it appears that beyond a certain level, a large labor force tends to increases prices, perhaps a reflection of expected state support. Profitability _(profil9l_ and _pro_out)_ has a positive effect, while high capital intensity _(equemp)_ has a negative effect. The fact that _emp out_ has a positive effect on shares prices suggests that high labor intensity (and low capital intensity) is considered a comparative advantage.

The effect of ownership distribution on prices is a complex one. I therefore use several alternative variables, including the variables already introduced: the Herfmdahl index H and the share of equity held by the strategic investors _(nonwide)._ In addition, I use the following variables: the percentage of shares sold to foreigners _(frnginv);_ the percentage ofshares sold to individual domestic investors _(dominv);_ the shares held by the first most important investment funds _(topl),_ the second most important _(top2);_ etc. as - 11l as the sum of the shares of the first through nth most important fund _(topl_n);_ and dummies indicating whether a particular investor, or n-number of funds, or any strategic investor has effective control _(control.)._ Obviously, some of these variables are closely related; for example, the correlations between the shares of the state and a dummy indicating its effective control is 0.78; and that between the shares of domestic and foreign investors and dummies indicating their control, 0.87 and 0.89 respectively. It is consequently difficult to the discriminate between the effects of individual variables. But, several correlations are actually negative, for example between the equity share held by all funds together and effective control by one or two funds.

Results Not all variables are significant for all three price series, in part due to the high collinearity between some of the firm-variables (e.g., _profit9l_ and _bookval,_ 0.92, see Table 4). Table 5 therefore only lists the results for the specifications for each price series which include the significant non-ownership explanatory variables and one or more ownership variables. The regressions have a good explanatory power. For example, compared to the results obtained by Shafik (1994b), the regressions here have better R<sup>2</sup> s (the highest is 0.35 versus the highest reported by Shafik of 0.10), often with a much smaller number of right band side variables.