Corporate Governance and Fixed Private Investment in an African Economy: The Case of Malawi
Year: 2008
Type: preprint
Abstract: This paper presents empirical evidence on the role of effective corporate governance on levels of fixed private investment in a typical developing African economy characterized by an underdeveloped capital market and weak legal institutions. Applying an eclectic econometric model on firm survey data from Malawi, the study finds support for the managerial discretion hypothesis as explanation for over-investment in SOEs and domestic firms; and support for asymmetric information hypothesis for foreign firms' investment behaviour. More notably, the study finds an insignificant contemporaneous effect of corporate governance on fixed private investment in Malawian firms, which only turns significant when conditioned on its interactive effects with quality of legal institutions.
Source: SSRN Electronic Journal
Author: Thomas Munthali
Institution: World Bank
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2293794841