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Country Legal Environments and Corporate Investment Performance

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  • Mueller Dennis C.
  • Yurtoglu B. Burcin

    (University of Vienna, Vienna, Austria)

Abstract

In recent years considerable attention has been devoted to differences across countries in the institutional environments in which corporations operate, and the consequences of these institutional differences for corporate performance. In this paper we test for the presence of differences in corporate performance across 38 countries, and in particular whether these differences are related to the types of legal systems existing in each country. To measure corporate performance we estimate returns on investment relative to company costs of capital in each country. We find significant differences in the investment performance of corporations across our sample of countries. Companies in countries with English-origin, common law legal systems perform significantly better on average than do those in civil law systems.

Suggested Citation

  • Mueller Dennis C. & Yurtoglu B. Burcin, 2000. "Country Legal Environments and Corporate Investment Performance," German Economic Review, De Gruyter, vol. 1(2), pages 187-220, May.
    • Handle: RePEc:bpj:germec:v:1:y:2000:i:2:p:187-220
    DOI: 10.1111/1468-0475.00011
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    Cited by:

    1. Joachim Winter, 2002. "The impact of pension reforms and demography on stock markets," MEA discussion paper series 02021, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    2. Januszewski, Silke I. & Koke, Jens & Winter, Joachim K., 2002. "Product market competition, corporate governance and firm performance: an empirical analysis for Germany," Research in Economics, Elsevier, vol. 56(3), pages 299-332, September.
    3. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu, 2001. "Corporate Governance, Capital MarketDiscipline and the Returns on Investment," CIG Working Papers FS IV 01-25, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    4. Axel Börsch‐Supan & Florian Heiss & Alexander Ludwig & Joachim Winter, 2003. "Pension Reform, Capital Markets and the Rate of Return," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 151-181, May.
    5. Jimmy A. Saravia, 2013. "The lifecycle of the firm, corporate governance and investment performance," Documentos de Trabajo CIEF 10927, Universidad EAFIT.
    6. Burcin Yurtoglu, 2003. "Corporate Governance and Implications for Minority Shareholders in Turkey," Working Papers 2003/7, Turkish Economic Association.
    7. Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin, 2008. "Insider ownership, ownership concentration and investment performance: An international comparison," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 688-705, December.
    8. Yen, Tze-Yu & Andre, Paul, 2007. "Ownership structure and operating performance of acquiring firms: The case of English-origin countries," Journal of Economics and Business, Elsevier, vol. 59(5), pages 380-405.
    9. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu, 2004. "Marginal q, Tobin's q, Cash Flow, and Investment," Southern Economic Journal, John Wiley & Sons, vol. 70(3), pages 512-531, January.
    10. Dennis Mueller, 2006. "Corporate Governance and Economic Performance," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(5), pages 623-643.
    11. Ajit Singh, 2003. "Competition, corporate governance and selection in emerging markets," Economic Journal, Royal Economic Society, vol. 113(491), pages 443-464, November.
    12. Gugler, Klaus & Mueller, Dennis C. & Peev, Evgeni & Segalla, Esther, 2013. "Institutional determinants of domestic and foreign subsidiaries’ performance," International Review of Law and Economics, Elsevier, vol. 34(C), pages 88-96.
    13. Börsch-Supan, Axel, 2004. "Global Aging: Issues, Answers, More Questions," MEA discussion paper series 04055, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    14. Börsch-Supan, Axel, 2004. "Global aging : issues, answers, more questions," Papers 07-28, Sonderforschungsbreich 504.
    15. Mueller, Dennis C. & Peev, Evgeni, 2007. "Corporate governance and investment in Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 414-437, June.
    16. Axel H. Boersch-Supan & Joachim K. Winter, 2001. "Population Aging, Savings Behavior and Capital Markets," NBER Working Papers 8561, National Bureau of Economic Research, Inc.

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