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Firm Growth and Legal Environment

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  • Ivan Miroshnychenko
  • Stefano Bozzi
  • Roberto Barontini

Abstract

An effective country‐level legal environment is crucial for promoting access to finance, development, and ultimately economic growth. Based on a sample of large companies listed in Continental Europe in the period 2002–2011, this study suggests that investor protection level is related to firm growth. Specifically, investor protection: a) enhances the growth rate of the firm; b) affects growth sensitivity to leverage and cash flow. These results provide empirical support to recommendations by policy makers advocating for increased investor protection in Europe.

Suggested Citation

  • Ivan Miroshnychenko & Stefano Bozzi & Roberto Barontini, 2019. "Firm Growth and Legal Environment," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 48(1), February.
    • Handle: RePEc:bla:ecnote:v:48:y:2019:i:1:n:12116
    DOI: 10.1111/ecno.12116
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