The Determinants of Asset Stripping: Theory and Evidence from the Transition Economies
Nauro F. Campos
Brunel University - Economics and Finance; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute; Institute for the Study of Labor (IZA)
University of Bristol - Department of Economics
William Davidson Institute Working Paper No. 786
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.
Number of Pages in PDF File: 38
Keywords: Asset stripping, law enforcement, corruption, transition
JEL Classification: H82, K42, O17, P26, P31working papers series
Date posted: May 23, 2006
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