Distressed acquisitions: Evidence from European emerging markets |
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| Affiliation: | 1. Institute of Economic Research, Hitotsubashi University, Naka 2-1, Kunitachi, Tokyo 186-8603, Japan;2. Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic; CESifo, Munich, Germany; IOS, Regensburg, Germany;3. Economic Research Institute for Northeast Asia (ERINA), Bandaijima 5-1, Chuo-ku, Niigata 950-0078, Japan |
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| Abstract: | We analyze factors behind 23,213 distressed acquisitions in European emerging markets from 2007 to 2019. Besides the impact of financial ratios, legal form, ownership structure, firm size, and age, we emphasize the role of institutions and channels of their propagation. We show that the quality and enforcement of insolvency laws are linked with the lower probability of distressed acquisitions, followed by corruption control and progress in banking reforms. The impact of institutions is larger in less-advanced countries as compared to economically stronger ones. The effect of institutions increased after the financial crisis but declined as the economic situation improved. |
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