Work

Corporate Governance, Finance, and the Real Sector

Year: 2012

Type: article

Abstract: We present a theory of the linkages between corporate governance, corporate finance, and the real sector of an economy. Using a structural model of industry equilibrium with endogenous entry, we show that poor corporate governance leads to low levels of competition, and to firms with high insider ownership and leverage. In contrast, good corporate governance promotes the adoption of more efficient technologies and development of sectors more exposed to moral hazard. We use our model to study equity market liberalization, and we show that liberalizations facilitate entry and adoption of more productive technologies, especially in countries with good corporate governance.

Source: Journal of Financial and Quantitative Analysis

DOI: 10.1017/s0022109012000531

Authors: Paolo Fulghieri, Matti Suominen

Institutions: University of North Carolina at Chapel Hill, European Corporate Governance Institute, Aalto University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Industry, innovation and infrastructure

Open Access status: bronze

OpenAlex ID: W2158689536