_5_ summed, the state could have effective control of 152 firnms _(controls)._ For another 100 either a domestic or foreign direct investor has control _(controld_ and _contro1j')._ Combining the frms in which either two ftuds, one domestic, one foreign investor, or the state could effectively have control, I find 992 fuins or 67% of all firms, with effective control by one party or two investment funds _(relctrt)._ The large fraction of firms in which there is effective control by one (or two) investors indicates that nominal shareholding--on average, these investors combined own only _51% (nonwide_ in Table 2)--is not necessarily a good indicator of effective control." Dispersion A useful measure of the degree of ownership dispersion is the Herfindahl index (the sum of squared ownership shares).<sup>7</sup> This index, H, takes on the value of one if the firm is wholly owned by one single investor. If ownership is exactly equally distributed among all shareholders, then H will be the mean equity share held. For any other distribution of ownership, the index will be in between, with more dispersed ownership closer to the mean and less dispersed closer to one. In calculating the indicawr H here, I use the same five shareholder classes for each individual firm (the state, the domestic and foreign investors, the investment funds, ail individuals, where I include the shares not sold with those held by the state). The share held by any individual is set to zero for the calculation of _H_ as any single individual owns only a marginally small amount of a given firm.

Calculating this indicator for the 1491 firms, I find that the mean H-indicator of dispersion is 14%, with a low close to 0% and a high of 87%, and a standard deviation of 13% (Table 2). A similar index for dispersion among the funds only (scaled, such that when one fund owns all fund shares, the index is one) has a mean of 33%, with a low of 7% and a high of 100%, and a standard deviation of 23 %. Relatively speaking, ownership of the average firm among funds is thus more concentrated, consistent with the fact that the top ten funds acquired three-quarter of all voucher points.

A disadvantage of the H-index is that it does not consider the total amount of shareownership by strategic investors. For example, if there are four strategic owners owning together 100% in all equal (25%) shares, then H will be the same as when one strategic owner owns 50%, with the rest widely distributed.<sup>8</sup> The second fim may, however, have more 6Actually, the correlations between the share of equity held and a dummy which is one in case of effective control is also negative for investment funds and the statt. It is positive **for** domestic investors, indicating that when they have a stake it tends to be for controlling purpose. For foreign investors, the correlation is zero. Combing one strategic investor or two funds, the correlation is negative again, consistent with the fact that the smaller the shares held by all strategic investors combined, the easier it is for any individual strategic investor (or two funds) to exercise control. Among the control dummies, there are no strong correlations (Table 2).

7Cable (1985) uses this index to investigate some aspects of corporate control in Germany and its effect on firm performance.

8 2 Mathematically, 4*(1/4)2 = 1/4, which is equal to (1/2)7 + E0 = 1/2, where the share held by each individual is set to zero. I also calculate the equivalent H-index for dispersion in ownership among the nonwide investors only (which is equal to one if there is only a single nonwide investor, even when there are many individual investors).