Corporate Finance and Restructuring: Evidence from Central and Eastern Europe


Köke, F. Jens ; Salem, Tanja


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URL: http://ub-madoc.bib.uni-mannheim.de/561
URN: urn:nbn:de:bsz:180-madoc-5613
Document Type: Working paper
Year of publication: 2000
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: G31 O12 G34 ,
Subject headings (SWD): Europa , Arbeitsproduktivität , Kapitalmarkt , Arbeit
Abstract: After the end of communism enterprises in Central and Eastern Europe (CEE) were marked by low levels of labor productivity, mainly because of too high employment levels. According to economic theory, the corporate capital structure can be an important element in the restructuring process. But both, empirical evidence on corporate finance in CEE countries and its relation to employment is still sparse. This study describes the patterns of the corporate capital structure for ten CEE countries over the years 1993-1998, taking two major Western economies as a benchmark. An impressive rise in total indebtedness suggests that there is room for creditors to fulfill their role in corporate governance. On the other hand, investment is predominantly financed internally in CEE firms, making creditor and shareholder governance more difficult. But a regression analysis shows that inefficient CEE firms are forced to downsize employment when they finance themselves largely externally, but less so for those firms with high levels of debt. However, downsizing is limited by soft budget constraints.
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Köke, F. Jens ; Salem, Tanja (2000) Corporate Finance and Restructuring: Evidence from Central and Eastern Europe. Open Access [Working paper]
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