EconPapers    
Economics at your fingertips  
 

Are Russian Commercial Courts Biased? Evidence from a Natural Bankruptcy Experiment

Ekaterina Zhuravskaya, Konstantin Sonin and Ariane Lambert-Mogiliansky ()

No 5998, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the nature of judicial bias in bankruptcy proceedings following the enactment of bankruptcy law in Russia in 1998. We find that regional political characteristics affected judicial decisions about the numbers and types of bankruptcy procedures initiated after the law took effect. In particular, controlling for indicators of firms? insolvency and the quality of the regional judiciary, reorganization procedures were significantly more frequent in regions with politically popular governors and governors who had hostile relations with the federal government. Poor judicial quality was also associated with higher incidence of reorganizations. In addition, the quality of the regional judiciary affected performance of firms in reorganization procedure: in regions with poor judicial quality firms in reorganization significantly underperformed firms not in bankruptcy; while the opposite was true in regions with high-quality judges. The effect of judicial quality on restructuring is particularly strong in regions with politically popular governors because the judicial bias in governor?s favor is the highest in poor-quality courts when governors are popular. This evidence is consistent with previously reported anecdotes, which suggested that politically strong regional governors used bankruptcy proceedings to protect firms from paying federal taxes.

Keywords: Bankruptcy; Capture; Incentives; Regional governments; Russia; Transition (search for similar items in EconPapers)
JEL-codes: D23 G33 H11 H77 (search for similar items in EconPapers)
Date: 2006-12
New Economics Papers: this item is included in nep-cis, nep-pbe and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://cepr.org/publications/DP5998 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Are Russian commercial courts biased?Evidence from a natural bankruptcy experiment (2006) Downloads
Working Paper: Are Russian commercial courts biased?Evidence from a natural bankruptcy experiment (2006) Downloads
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:cpr:ceprdp:5998

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5998

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2024-01-05
Handle: RePEc:cpr:ceprdp:5998