IDEAS home Printed from https://ideas.repec.org/a/kap/ejlwec/v60y2025i1d10.1007_s10657-025-09852-0.html
   My bibliography  Save this article

Legal form affects the performance of a company

Author

Listed:
  • Tadeusz Dudycz

    (Wrocław University of Science and Technology)

Abstract

Using the latent multidimensional approach, the paper examines the relationship between a company’s legal form and its performance. Based on 72,596 observations of companies operating in Poland, we show that the legal form has a strong relationship with the company’s efficiency. We reveal that the corporate form and limited liability, contrary to popular opinion, do not ensure the highest efficiency. They also do not stand out in terms of growth and risk. Entrepreneurship, direct involvement with the company, and the specific bond between partners are still key success factors. We also show that companies that are obliged to appoint governing bodies, favouring the separation of owners from management, are less efficient than those that do not have such an obligation. As a result, joint-stock companies, widely regarded as the pinnacle of the legal form, are characterized by lower efficiency than unlimited liability companies. We indicate that the reason is high agency costs, and this is confirmed by the cash ratio, used to approximate agency costs.

Suggested Citation

  • Tadeusz Dudycz, 2025. "Legal form affects the performance of a company," European Journal of Law and Economics, Springer, vol. 60(1), pages 81-143, August.
    • Handle: RePEc:kap:ejlwec:v:60:y:2025:i:1:d:10.1007_s10657-025-09852-0
    DOI: 10.1007/s10657-025-09852-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10657-025-09852-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10657-025-09852-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • K2 - Law and Economics - - Regulation and Business Law
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:ejlwec:v:60:y:2025:i:1:d:10.1007_s10657-025-09852-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.