Do Corporate Control and Product Market Competition Lead to Stronger Productivity Growth? Evidence from Market-Oriented and Blockholder-Based Governance Regimes
AbstractWe investigate the impact of corporate governance and product market competition on productivity of German and U.K. firms. We find a strong positive relation between productivity and product market competition and various governance mechanisms. In poorly performing U.K. firms, the presence of strong outside blockholders leads to substantial increases in productivity. In contrast, for poorly performing and distressed German firms, it is bank debt concentration that stimulates productivity growth. Whereas high bank debt concentration also supports productivity growth in profitable German firms, leverage is unrelated to productivity growth in U.K. firms. Weak product market competition in the United Kingdom has a negative impact on productivity growth in both widely held and concentrated firms, with the exception of firms controlled by insiders. For profitable German firms, only control by banks, insurance firms, and the government can somewhat reduce the negative effect of weak product market competition.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Law and Economics.
Volume (Year): 48 (2005)
Issue (Month): 2 (October)
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Web page: http://www.journals.uchicago.edu/JLE/
Other versions of this item:
- Koke, J. & Renneboog, L.D.R., 2003. "Do Corporate Control and Product Market Competition Lead to Stronger Productivity Growth? Evidence from Market-Oriented and Blockholder-Based Governance Regimes," Discussion Paper 2003-78, Tilburg University, Center for Economic Research.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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- Guercio, Diane Del & Hawkins, Jennifer, 1999. "The motivation and impact of pension fund activism," Journal of Financial Economics, Elsevier, vol. 52(3), pages 293-340, June.
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