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Corporate governance quality: Trends and real effects

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  • De Nicolò, Gianni
  • Laeven, Luc
  • Ueda, Kenichi

Abstract

This paper constructs a composite index of corporate governance quality, documents its evolution during the 1994-2003 period in selected emerging and developed economies, and assesses its impact on growth and productivity of the economy and its corporate sector. Our investigation yields three main findings. First, corporate governance quality in most countries has overall improved, although in varying degrees and with a few notable exceptions. Second, the data exhibit cross-country convergence in corporate governance quality with countries that score poorly initially catching up with countries with high corporate governance scores. Third, the impact of improvements in corporate governance quality on traditional measures of real economic activity--GDP growth, productivity growth, and the ratio of investment to GDP--is positive, significant and quantitatively relevant, and the growth effect is particularly pronounced for industries that are most dependent on external finance.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Intermediation.

Volume (Year): 17 (2008)
Issue (Month): 2 (April)
Pages: 198-228

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Handle: RePEc:eee:jfinin:v:17:y:2008:i:2:p:198-228

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Web page: http://www.elsevier.com/locate/inca/622875

Related research

Keywords: Corporate governance Disclosure Transparency Economic growth Productivity;

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References

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Citations

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Cited by:
  1. Christian Bayer & Carsten Burhop, 2008. "Corporate Governance and Incentive Contracts: Historical Evidence from a Legal Reform," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2008_11, Max Planck Institute for Research on Collective Goods.
  2. Gianni De Nicolò & Luciana Juvenal, 2012. "Financial Integration, Globalization, and Real Activity," CESifo Working Paper Series 3737, CESifo Group Munich.
  3. Höpner, Martin & Petring, Alexander & Seikel, Daniel & Werner, Benjamin, 2009. "Liberalisierungspolitik: Eine Bestandsaufnahme von zweieinhalb Dekaden marktschaffender Politik in entwickelten Industrieländern," MPIfG Discussion Paper 09/7, Max Planck Institute for the Study of Societies.
  4. Yishay Yafeh & Kenichi Ueda & Stijn Claessens, 2010. "Investment and Institutions," 2010 Meeting Papers 513, Society for Economic Dynamics.
  5. Tong, Hui & Wei, Shang-Jin, 2012. "Does Trade Globalization Induce or Inhibit Corporate Transparency? Unbundling the Growth Potential and Product Market Competition Channels," CEPR Discussion Papers 8836, C.E.P.R. Discussion Papers.
  6. Sándor Gardó, 2010. "Bank Governance and Financial Stability in CESEE: A Review of the Literature," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 6-31, February.
  7. Yishay Yafeh & Kenichi Ueda & Stijn Claessens, 2010. "Financial Frictions, Investment, and Institutions," IMF Working Papers 10/231, International Monetary Fund.
  8. Kenichi Ueda & Stijn Claessens, 2008. "Banks and Labor as Stakeholders: Impact on Economic Performance," IMF Working Papers 08/229, International Monetary Fund.
  9. Yishay Yafeh & Stijn Claessens, 2011. "Additions to Market Indices and the Comovement of Stock Returns Around the World," IMF Working Papers 11/47, International Monetary Fund.

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