Katarina Zajc

Judicial Incentives and Performance at Lower Courts: Evidence from Slovenian Judge-Level Data

Empirical studies of judicial behavior using judge-level data are scarce and almost exclusively focused on higher court judges in the U.S. The majority of disputes in any legal system, however, are adjudicated by lower court judges and conclusions about judicial behavior from one legal system cannot be generalized to other legal systems. This paper draws on unique judge-level data to study judicial performance at lower courts in Slovenia, a post-socialist member state of the European Union struggling with implementation of an effective judicial system. We first examine the determinants of judicial productivity and elucidate the role of a judge’s demographic characteristics, education, experience, salary, promotion concerns, and case specialization. We then explore the possible tradeoff between the quantity and the quality of judicial case resolution, shedding light on the benefits and costs of those legal reform measures that aim to increase judicial productivity in Slovenian lower courts.

Understanding Modes of Civil Case Disposition: Evidence from Slovenian Courts

We contribute to the scant empirical literature on the functioning of courts in the post-socialist world by analyzing civil case disposition in Slovenia. We first characterize basic empirical patterns in modes of civil case disposition in Slovenian local courts. We then examine court-level determinants of the incidence of in-court settlements versus trial-based judgments. Consistent with the theory that both judges and disputing parties take into account their respective private benefits and costs when choosing their preferred mode of case disposition, we find evidence that the incidence of in-court settlements versus trial-based judgments increases with the number of all case filings per judge. Thus, court resources and demand for court services influence not only total court output, as previously established in the literature, but also how cases are disposed of.

Inside Post-Socialist Courts: The Determinants of Adjudicatory Outcomes in Slovenian Commercial Disputes

Despite the judiciary’s central role in the capitalist market system, micro-level empirical analyses of courts in post-socialist countries are remarkably rare. This paper draws on a unique hand-collected dataset of commercial claims filed at Slovenian courts to examine the determinants of two salient adjudicatory outcomes: whether a case was resolved via trial or settlement and if the case was tried, whether the plaintiff was awarded the initial claim. Consistent with the divergent expectations theory of litigation, we find that trial-based resolution is more likely when the case is complex and less likely when parties use mediation. Addressing sample selection and endogeneity concerns, we show that defendant’s legal representation, plaintiff’s profitability, and, importantly, court identity are robust predictors of plaintiff victory at trial. Thus, more than two decades after the start of transition in Slovenia, the judicial system is still a source of legal inconsistency and uncertainty.

From Social to Private Ownership: Multiple Blockholders in Slovenian Unlisted Firms

This paper studies the ownership structures of unlisted privatized firms in Slovenia. On the basis of official ownership records for all nonfinancial firms over a six-year period (1999-2004), we explore the factors responsible for the concentration of ownership and for the dissolution of the multiple blockholder structures that these firms were assigned at privatization. We observe significant path dependence: patterns of ownership and control are in part determined by the persistence of the initial privatization owners (state funds, privatization investment funds, employees, and managers) as firm blockholders. We also find that ownership concentrates less in larger, riskier, and better-performing firms. Multiple blockholders remain present in the firms in which the two largest owners are of the same type, which presumably makes it easier for them to control in coalition.

Litigation and the timing of settlement: evidence from commercial disputes

Although an overwhelming proportion of all legal disputes end in settlement, the determinants of the timing of settlement remain empirically underexplored. We draw on a novel dataset on the duration of commercial disputes in Slovenia to study how the timing of settlement is shaped by the stages and features of the litigation process. Using competing risk regression analysis, we find that events such as court-annexed mediation and the first court session, which enable the disputing parties to refine their respective expectations about the case outcome, in general reduce case duration to settlement. The magnitude of the respective effects, however, varies with time. Completion of subsequent court sessions, in contrast, does not affect the time to settlement. Judicial workload affects the timing of settlement indirectly, via the effect on the timing of the first court session. We also examine the effect of other case and party characteristics.

Debt Recovery in Firm Liquidations: Do Liquidation Trustees Matter?

Insolvency systems play a crucial role in protection of creditor rights, yet micro-level empirical evidence on the functioning of insolvency regimes worldwide is sparse. We investigate whether creditors’ recovery of outstanding claims, a measure of ex-post efficiency of an insolvency regime, depends on the characteristics of the trustee delegated the administration of the liquidation proceedings. To this end, we draw on a novel dataset of firm liquidations from Slovenia and exploit courts’ de facto random assignment of firm liquidation cases to licensed liquidation trustees. Using a wide range of specifications and controls, we find that a subset of trustee characteristics indeed matters for debt recovery. Thus, ex-post efficiency of an insolvency regime depends not only on its formal rules and procedures, but also on who implements them in practice.

Slovenian CG Code and its Ammendments: Are Slovenian Financial Markets Better Off?

The article discusses Slovenian corporate governance practice in the prospect of the introduction and the further amendments of the Corporate Governance Code (Code) and its actual implementation in an environment otherwise characterized by big deficiencies in the enforcement of legal rules and poor functioning of the judiciary. Theoretically, when the institutions such as judiciary are not effective, any improvement in substantive law (law on books) makes very little sense. Hence, the financial markets are better off only to the extent that legal institutions became more effective and any improvement in the regulations produces no results when not accompanied by corresponding improvement in the enforcement of the legal rules. In this regard the article discusses the possible role of the Code as, to some extent, a substitute for inefficient legal institutions. The argument goes as follows. The markets should be to a certain extent capable to motivate the creation of separating equilibrium, namely separating “good” firms from “bad” firms. In this regard, the introduction of the non-mandatory Code of best governance practice should in our view provide the firms with a framework for signaling credible information about them and, consequently, allow the markets to differentiate between well and badly performing firms. As such, the Code potentially enhances the transparency and, consequently, the functioning of the capital markets without relying too much on the efficiency of legal institutions.