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Corporate Governance and the Determinants of Investment

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Author Info

  • Klaus Gugler
  • Dennis C. Mueller
  • B. Burcin Yurtoglu

Abstract

We use investment-cash flow regressions to show that both asymmetric-information and agency problems are more severe in Continental Europe than in the Anglo-Saxon countries leading to too little investment by firms with attractive investment opportunities and too much by those with poor investment opportunities. Legal systems, accounting standards, and ownership structure systematically affect the investment-cash flow sensitivity. Cash flow coefficients are largest for family-controlled firms in Europe.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 163 (2007)
Issue (Month): 4 (December)
Pages: 598-626

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200712)163:4_598:cgatdo_2.0.tx_2-h

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Cited by:
  1. Musiliu 0. Oseni & Michael G. Pollitt, 2013. "The Economic Costs of Unsupplied Electricty: Evidence from Backup Generation among African Firms," Cambridge Working Papers in Economics 1351, Faculty of Economics, University of Cambridge.
  2. Esther Kalkbrenner, 2010. "Acquired versus Non-Acquired Subsidiaries - Which Entry Mode do Parent Firms Prefer," NRN working papers 2010-22, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  3. Ruiz-Porras, Antonio & Lopez-Mateo, Celina, 2010. "The separation of ownership and control and investment decisions in Mexican manufacturing firms," MPRA Paper 25237, University Library of Munich, Germany.
  4. Randall Morck & Bernard Yeung, 2010. "Agency Problems and the Fate of Capitalism," NBER Working Papers 16490, National Bureau of Economic Research, Inc.
  5. 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.
  6. Rammer, Christian & Köhler, Christian, 2012. "Innovationen, Anlageinvestitionen und immaterielle Investitionen," ZEW Discussion Papers 12-085, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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