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When is Two Really Company? The Effects of Competition and Regulation on Corporate Governance

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  • Udayasankar, Krishna
  • Das, Shobha
  • Krishnamurti, Chandrasekhar

Abstract

In this paper we bring together agency stakeholder institutional and resource-dependence theories to study the direct and interactive effects of country regulation and competition on two dimensions of corporate governance: the overall quality of corporate governance of firms in a country and firm-to-firm variations in corporate governance. Interactive conditions are more representative of the real-world context of corporate governance and the contradictory pressures that firms face in such interactive conditions are better explained through the use of multiple theories of corporate governance. Using a dataset that spans 15 countries and includes 463 firms we find that firm corporate governance is better in conditions where either regulation or competition is well-developed by comparison with interactive conditions. We also find that while regulation enhances within-country convergence it is likely that competition serves to enhance across-country convergence.

Suggested Citation

  • Udayasankar, Krishna & Das, Shobha & Krishnamurti, Chandrasekhar, 2008. "When is Two Really Company? The Effects of Competition and Regulation on Corporate Governance," Working Paper Series 19122, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:19122
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    File URL: https://ir.wgtn.ac.nz/handle/123456789/19122
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