Enterprises are better able to conceal both transactions and profits. When enterprises are unable to get bank loans for working capital, they get trade credit from suppliers. These suppliers, in turn, ask for payment in goods, either to get a more secure claim or to get a higher price. In the absence of effective corporate governance, less transparent transactions make the diversion of funds easier. Barter prices tend to be higher than cash prices, allowing an enterprise to appear viable and to indicate compliance with accounting rules that prohibit selling goods below cost.
Tax avoidance is a much less important motivator.
The Aukutsionek data sheds some light on the question of whether barter is undertaken to continue production in value-destroying companies. For example, intertemporal barter is more effective as a means of extending trade credit because a claim on goods is less likely to be contested than a claim on cash. Both inflated prices and payment to suppliers and the government in goods rather than cash allow value-destroying enterprises to appear solvent. In order to answer this question, we need a more complete description of barter in its many forms, and an accounting of the various types of participants. Initial interviews with Russian managers engaged in barter indicate that both viable and nonviable enterprises take advantage of the mechanisms that have arisen to facilitate barter transactions.