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Corporate Governance, Institutions, Markets and Social Factors

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  • Nawaf Almaskati

    (University of Waikato)

  • Ron Bird

    (University of Waikato)

  • Susanna Lu

    (University of Waikato)

Abstract

We use a comprehensive set of country-level social and institutional measures to study the relationship between country-level factors and firm-level governance. We also examine the roles of the country’s financial development status and the firm’s external financing needs in influencing the firm’s governance framework. Using a sample of 43 countries and 3301 firms, we find that country-level factors explain a large part of the variation in firm-level governance across countries. We also find evidence that the relationship between country-level factors and firm-level mechanisms is best represented as a moderating relationship. The results also indicate the presence of a complementary relationship, albeit sometimes insignificant, between firm-level governance and all the country-level variables included in our study. When accounting for the effect of a country’s financial development status and a firm’s external financing needs, we find evidence of a positive relationship between firm-level governance and firm returns and value for firms with high financing needs which operate in countries with high financial development.

Suggested Citation

  • Nawaf Almaskati & Ron Bird & Susanna Lu, 2019. "Corporate Governance, Institutions, Markets and Social Factors," Working Papers in Economics 19/09, University of Waikato.
    • Handle: RePEc:wai:econwp:19/09
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    Keywords

    country-level governance; firm-level governance; complementary relationship; financial development; external financing needs;
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