Asset Strippers

Nauro Campos and Francesco Giovannoni

No 35, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: During the transition from plan to market, managers and politicians succeeded in maintaining de facto ownership of assets. This paper puts forward a theoretical model and econometric evidence on asset stripping in transition. We argue that it is driven by the value of the stripped assets, the probability of punishment and political power (the latter proxied by firm size). Using 1997 survey data for about 950 firms in five countries, we find that (1) firm size is a chief determinant of asset stripping and (2) there is strong support for the predicted non-linear relationship between potential profitability and the use of stripped assets.

Keywords: asset stripping; transition (search for similar items in EconPapers)
JEL-codes: H82 K42 O17 P26 P31 (search for similar items in EconPapers)
Date: 2003-06-04
New Economics Papers: this item is included in nep-law and nep-pbe
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