#11519. Institutions and corporate financial distress in Central and Eastern Europe

July 2026publication date
Proposal available till 15-05-2025
4 total number of authors per manuscript0 $

The title of the journal is available only for the authors who have already paid for
Journal’s subject area:
Law;
Economics and Econometrics;
Business and International Management;
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Abstract:
After a long period of economic and legal transition, new institutions emerged in Central and Eastern Europe (CEE). Firms facing financial difficulties must cope with the quality of those institutions. This study investigates the association between the institutional environment and a firm’s recovery from financial distress. After controlling for the endogeneity of institutional quality and financial features, dynamic panel estimates confirm that increased anticorruption efforts contributed to restoring the financial health of CEE firms. By reducing costs resulting from bribes and bureaucracy, efficient anticorruption mechanisms can facilitate firm efforts to overcome financial distress. In addition, several CEE countries created anticorruption agencies, mainly prior to the financial crisis or at the beginning of the postcrisis period. The development and independence of such agencies should be highly encouraged in CEE, as financially distressed firms may benefit from anticorruption policies.
Keywords:
Central and Eastern Europe; Corruption; Financial distress; Institution

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