The lemon market of insolvency proceedings in Spain in the new normal: Information, asymmetry, and adverse selection problems

Unai Olabarrieta, Leire San-Jose and Andrés Araujo

Cogent Business & Management, 2023, vol. 10, issue 3, 2266656

Abstract: Insolvency proceedings are strategic for the competitiveness of a national economy. The new law, but also new financial situation of organizations affect the new normal of insolvency framework. In Europe, standards aimed at creating an efficient framework for corporate insolvency resolution are constantly changing to enhance the efficiency of such mechanisms. This pursuit contrasts with the lack of specific efficiency data available to both legislators and researchers, there are no solid statistics to investigate the phenomenon from the perspective of its efficiency, which makes it impossible in practice to investigate its explanatory variables. Previous studies have led us to reflect on key information asymmetry and adverse selection problems resulting from a gap between the new challenges on insolvencies processes and options, because the lack of information. Based on this reflection, we have identified parallelisms between the lemon market, and current insolvency proceedings in Spain. Although, the legal system is modified, the insolvency process itself is a drag, for the achievement of the long-awaited efficiency of the process. It will be necessary to change, not only the legislation, but also the information provided, and create a new insolvency system because actual has “lemons signals”, this circumstance is producing negative effects on the efficiency and competence of a key figure in the process: the insolvency administrator.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/23311975.2023.2266656 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:oabmxx:v:10:y:2023:i:3:p:2266656

Ordering information: This journal article can be ordered from
http://cogentoa.tandfonline.com/journal/OABM20

DOI: 10.1080/23311975.2023.2266656

Access Statistics for this article

Cogent Business & Management is currently edited by Len Tiu Wright and Tahir Nisar

More articles in Cogent Business & Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().