Corporate Governance, Institutions, Markets and Social Factors

Nawaf Almaskati (), Ron Bird and Susanna Lu ()
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Nawaf Almaskati: University of Waikato
Susanna Lu: University of Waikato

Working Papers in Economics from 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.

Keywords: country-level governance; firm-level governance; complementary relationship; financial development; external financing needs (search for similar items in EconPapers)
Pages: 40 pages
Date: 2019-07-05
New Economics Papers: this item is included in nep-bec and nep-cfn
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Journal Article: Corporate governance, institutions, markets, and social factors (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:wai:econwp:19/09

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