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The Determinants of Asset Stripping: Theory and Evidence from the Transition Economies

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  • Campos, Nauro
  • Giovannoni, Francesco

Abstract

During the transition from plan to market, managers and politicians succeeded in maintaining control of large parts of the stock of socialist physical capital. Despite the obvious importance of this phenomenon, there have been no efforts to model, measure and investigate this process empirically. This paper tries to fill this gap by putting forward theory and econometric evidence. We argue that asset stripping is driven by the interplay between the firm's potential profitability and its ability to influence law enforcement. Our econometric results, for about 950 firms in five transition economies, provide support for this argument.

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  • Campos, Nauro & Giovannoni, Francesco, 2005. "The Determinants of Asset Stripping: Theory and Evidence from the Transition Economies," CEPR Discussion Papers 5215, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5215
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    Cited by:

    1. Nauro Campos & Francesco Giovannoni, 2007. "Lobbying, corruption and political influence," Public Choice, Springer, vol. 131(1), pages 1-21, April.
    2. Grosman, Anna & Leiponen, Aija, 2018. "Organizational transparency and power in firm ownership networks," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1158-1177.
    3. Choi, Seong-jin & Jiménez, Alfredo & Lee, Jeoung Yul, 2020. "The impact of political capabilities and political markets on firms' decision to lobby," Journal of International Management, Elsevier, vol. 26(4).
    4. Vladan Ivanović & Vadim Kufenko & Boris Begović & Nenad Stanišić & Vincent Geloso, 2019. "Continuity Under a Different Name: The Outcome of Privatisation in Serbia," New Political Economy, Taylor & Francis Journals, vol. 24(2), pages 159-180, March.
    5. Serguey Braguinsky, 2009. "Postcommunist Oligarchs in Russia: Quantitative Analysis," Journal of Law and Economics, University of Chicago Press, vol. 52(2), pages 307-349, May.
    6. Jan Hagemejer & Joanna Tyrowicz, 2020. "A New Instrument for Measuring the Local Causal Effect of Privatisation on Firm Performance," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 35-52.
    7. Mykhayliv, Dariya & Zauner, Klaus G., 2017. "The impact of equity ownership groups on investment: Evidence from Ukraine," Economic Modelling, Elsevier, vol. 64(C), pages 20-25.
    8. Koman, Matjaž & Laki?evi?, Milan & Prašnikar, Janez & Svejnar, Jan, 2013. "Asset Stripping, Rule of Law and Firm Survival: The Hoff-Stiglitz Model and Mass Privatization in Montenegro," IZA Discussion Papers 7821, Institute of Labor Economics (IZA).
    9. Aidan R. Vining & David L. Weimer, 2016. "The challenges of fractionalized property rights in public‐private hybrid organizations: The good, the bad, and the ugly," Regulation & Governance, John Wiley & Sons, vol. 10(2), pages 161-178, June.
    10. Mykhayliv, Dariya & Zauner, Klaus G., 2013. "Investment behavior and ownership structures in Ukraine: Soft budget constraints, government ownership and private benefits of control," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 265-278.
    11. Bruno, Randolph Luca, 2019. "Tax enforcement, tax compliance and tax morale in transition economies: A theoretical model," European Journal of Political Economy, Elsevier, vol. 56(C), pages 193-211.
    12. Koman, Matjaž & Lakićević, Milan & Prašnikar, Janez & Svejnar, Jan, 2015. "Asset stripping and firm survival in mass privatization: Testing the Hoff-Stiglitz and Campos-Giovannoni models in Montenegro," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 274-289.
    13. Saul Estrin & Svetlana Poukliakova & Daniel Shapiro, 2009. "The Performance Effects of Business Groups in Russia," Journal of Management Studies, Wiley Blackwell, vol. 46(3), pages 393-420, May.

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    More about this item

    Keywords

    Corruption; Transition; Law enforcement; Asset Stripping;
    All these keywords.

    JEL classification:

    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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