The state of the state – Economic property rights and firm profitability versus corruption. New evidence from the Czech Republic

A.P. Malinowska ()
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A.P. Malinowska: Center for Social and Economic Research, Al. Jana Pawła II 61b, Warsaw, Poland

Acta Oeconomica, 2021, vol. 71, issue 1, 117-136

Abstract: Despite significant advances in economic literature on the relationship between graft and economic growth, the consensus in nowhere in sight. The current paper enriches the extant literature on the subject by: 1) extending econometric techniques in an attempt to quantify and model institutional development; and 2) providing novel results on the dynamics between non-standardised and standardised institutional metrics. Utilising a new dataset compiled for 423 publicly quoted Czech, non-financial companies with macroeconomic and institutional metrics, we fashion a dynamic model approximating the interactions between the country's institutional development and firm profits as well as examining the relationship between the Czech corruption and the national institutional framework in the years of 2007–2016. The economic property rights appear to contribute to firm accounting profits- and cash flow-based profitability metrics. As regards the anti-corruption policies, the study's outcomes indicate that improvement in economic property rights could have propelled the positive impact of lax anti-corruption government action and inefficient judiciary on firm profits.

Keywords: corruption; institutions; economic property rights; firm profitability; transition economies (search for similar items in EconPapers)
JEL-codes: G38 O43 P37 (search for similar items in EconPapers)
Date: 2021
Note: The author changed her affiliation since the paper was accepted.
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