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Firm Investments and Corporate Governance in Asian Emerging Markets

Author

Listed:
  • Tanweer Hasan

    (Roosevelt University, U.S.A.)

  • Palani-Rajan Kadapakkam

    (University of Texas at San Antonio, U.S.A.)

  • P. C. Kumar

    (American University, U.S.A.)

Abstract

The quality of corporate governance has been shown to have wide-ranging implications, e.g., on the performance of stock markets and on exchange rates. This study investigates whether the quality of corporate governance in a country impacts investment decisions made at the micro level of the firm. The study focuses on Asian emerging markets since they have widely varying standards of corporate governance. Based on eight measures of corporate governance, four aggregate indices of corporate governance (business environment, legal environment, investor rights, and an overall measure) are developed for seven countries in the sample drawing on data from published sources. The results indicate that improvements in corporate governance mitigate the dependency of firm investments on their internal resources and facilitate access by firms to capital markets.

Suggested Citation

  • Tanweer Hasan & Palani-Rajan Kadapakkam & P. C. Kumar, 2008. "Firm Investments and Corporate Governance in Asian Emerging Markets," Multinational Finance Journal, Multinational Finance Journal, vol. 12(1-2), pages 21-44, March-Jun.
    • Handle: RePEc:mfj:journl:v:12:y:2008:i:1-2:p:21-44
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    References listed on IDEAS

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    Cited by:

    1. Chiang, Yao-Min & Chang, Pang-Ru, 2022. "Overinvestment, ownership structure, and directors' and officers’ liability insurance," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 38-50.

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    More about this item

    Keywords

    corporate governance; firm investments; emerging markets; investment-cashflow sensitivity;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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