Legal Weakness, Investment Risks, and Distressed Acquisitions: Evidence from Russian Regions

Yuko Adachi and Ichiro Iwasaki

No 98, RRC Working Paper Series from Russian Research Center, Institute of Economic Research, Hitotsubashi University

Abstract: This paper traces the survival status of 93,260 Russian business firms in the period of 2007–2019 and empirically examines the determinants of the acquisition of financially distressed companies (i.e., distressed acquisitions). We found that, of 93,260 firms, 50,743 failed in management, and among these distressed firms, 10,110 were rescued by acquisition during the observation period. Our empirical results indicate that, in Russian regions, the weakness of the legal system tends to increase the probability of distressed acquisitions, while other socioeconomic risks negatively affect it. These tendencies are common in most industries and regions. It is also revealed that, in the most developed area, monotown enterprises are more likely to be bailed out by acquisition after management failure than other firms, but it is not always true for the whole nation.

Keywords: legal weakness; investment risk; financial distress; distressed acquisitions; Russia (search for similar items in EconPapers)
JEL-codes: C35 D02 D22 E02 G34 K20 L22 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2022-03
New Economics Papers: this item is included in nep-cfn, nep-cis, nep-ent, nep-law, nep-rmg, nep-sbm and nep-tra
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/73379/RRC_WP_No98.pdf

Related works:
Journal Article: Legal Weakness, Investment Risks, and Distressed Acquisitions: Evidence from Russian Regions (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:rrcwps:98

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