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How Well Do Institutional Theories Explain Firms' Perceptions of Property Rights?

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  • Meghana Ayyagari
  • Asli Demirgüc-Kunt
  • Vojislav Maksimovic

Abstract

We examine how well several institutional- and firm-level factors explain firms' perceptions of property rights protection. The institutional theories we investigate account for approximately 50% of the country-level variation, indicating that current research addresses first-order factors. Firm-level characteristics, such as legal organization and ownership structure, are comparable with institutional factors in explaining variations in property rights protection. A country's legal origin predicts property rights variation better than its religion, ethnic fractionalization, or natural endowments. However, these results are driven by the inclusion of former Socialist economies in the sample. When we exclude the former Socialist economies, legal origin explains considerably less than ethnic fractionalization does. (JEL D23, K4, C5) The Author 2006. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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Bibliographic Info

Article provided by Society for Financial Studies in its journal The Review of Financial Studies.

Volume (Year): 21 (2008)
Issue (Month): 4 (July)
Pages: 1833-1871

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Handle: RePEc:oup:rfinst:v:21:y:2008:i:4:p:1833-1871

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Cited by:
  1. Ayyagari, M. & Beck, T.H.L. & Demirgüç-Kunt, A., 2007. "Small and medium enterprises across the globe," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4731699, Tilburg University.
  2. Beck, T.H.L. & Demirgüc-Kunt, A. & Maksimovic, V., 2008. "Financing patterns around the world: Are small firms different?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3132806, Tilburg University.
  3. Berggren, Niclas & Bjørnskov, Christian, 2012. "Does Religiosity Promote Property Rights and the Rule of Law?," Working Paper Series 905, Research Institute of Industrial Economics.
  4. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2013. "Size and age of establishments: evidence from developing countries," Policy Research Working Paper Series 6718, The World Bank.
  5. Fan, Joseph P.H. & Gillan, Stuart L. & Yu, Xin, 2013. "Innovation or imitation?," Journal of Multinational Financial Management, Elsevier, vol. 23(3), pages 208-234.
  6. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2006. "How important are financing constraints ? The role of finance in the business environment," Policy Research Working Paper Series 3820, The World Bank.
  7. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2012. "Financing of firms in developing countries : lessons from research," Policy Research Working Paper Series 6036, The World Bank.
  8. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2006. "What determines protection of property rights ? An analysis of direct and indirect effects," Policy Research Working Paper Series 3940, The World Bank.
  9. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2007. "Firm innovation in emerging markets : the roles of governance and finance," Policy Research Working Paper Series 4157, The World Bank.
  10. Chen, Yunling & Liu, Ming & Su, Jun, 2013. "Greasing the wheels of bank lending: Evidence from private firms in China," Journal of Banking & Finance, Elsevier, vol. 37(7), pages 2533-2545.
  11. Roe, Mark J. & Siegel, Jordan I., 2011. "Political instability: Effects on financial development, roots in the severity of economic inequality," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 279-309, September.
  12. Barth, James R. & Lin, Chen & Lin, Ping & Song, Frank M., 2009. "Corruption in bank lending to firms: Cross-country micro evidence on the beneficial role of competition and information sharing," Journal of Financial Economics, Elsevier, vol. 91(3), pages 361-388, March.
  13. Demirguc-Kunt, Asli, 2006. "Finance and economic development : policy choices for developing countries," Policy Research Working Paper Series 3955, The World Bank.
  14. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2011. "Small vs. young firms across the world : contribution to employment, job creation, and growth," Policy Research Working Paper Series 5631, The World Bank.

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