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International Evidence on Economic Freedom, Governance, and Firm Performance

In: International Corporate Governance and Regulation

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  • Min-Yu (Stella) Liao

Abstract

The literature has documented evidence that economic freedom is positively associated with economic growth, investment spending, income equality, employment, gender equality, etc. Economic freedom is also found to be associated with a country’s rule of law and legal regime. There is, however, little studies examining how economic freedom affects a firm’s performance such as firm valuation and profitability. The evidence presented in this study shows that economic freedom strengthens a firm’s valuation and profitability. Additionally, firms headquartered in emerging markets or younger firms from countries with higher levels of economic freedom experience higher valuation and profitability. That is, economic freedom is more beneficial for firms from emerging markets and is crucial to the success of early-stage firms.

Suggested Citation

  • Min-Yu (Stella) Liao, 2018. "International Evidence on Economic Freedom, Governance, and Firm Performance," Advances in Financial Economics, in: International Corporate Governance and Regulation, volume 20, pages 85-103, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:afeczz:s1569-373220180000020004
    DOI: 10.1108/S1569-373220180000020004
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    Citations

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    Cited by:

    1. Anh‐Tuan Doan & Bich‐Thanh Truong & Chi‐Cuong Nguyen & Phan‐Tam‐Nhu Nguyen & Hai‐Yen Truong & Anh‐Tuan Le, 2023. "Corruption and corporate leverage in an emerging economy: The role of economic freedom," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(2), pages 599-629, June.

    More about this item

    Keywords

    Economic freedom; firm performance; governance; emerging markets; entrepreneurship; economic growth; F36; F43; F65; G15; O5; P4;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • P4 - Political Economy and Comparative Economic Systems - - Other Economic Systems

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