Abstract
This paper analyses three corporate finance aspects of Poland's proposed mass privatization program (MPP): design feasibility, incentive systems employed and initial valuation method of the selected state-owned enterprises (SOEs). Also discussed are critical corporate governance issues that will in part determine the ultimate success of Poland's unique approach to mass privatization. Poland's MPP is designed to privatize en masse over 400 mid-to-large size Polish SOEs. In the mid-1995, Poland's MPP installed 15 specially designed national investment funds (NIFs) as core investors in each of the 400+ privatized firms. NIFs, which are like high-powered Western mutual funds, have hired consortia of Polish-foreign fund managers or advisors to help restructure the target operating companies over the next ten years. The stated goal of the MPP Law — and the key basis of fund managers' incentive compensation — is to increase shareholder value in the former SOEs through restructuring.
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