Competition law reform and firm performance: Evidence from developing countries

Incheol Kim, Suin Lee and Bina Sharma

Emerging Markets Review, 2023, vol. 56, issue C

Abstract: We examine the effects of competition laws on firm performance in East Asian countries that have enacted antitrust legislation in the last three decades. Exploiting the staggered changes of these laws as quasi-exogenous shocks, we find that strengthened competition laws improve firm performance. Treated firms increase R&D investments and efficiency in inventory and asset management, while free cash flow decreases after reforms. Also, the effect of competition laws on firm performance is stronger with weaker corporate governance. Our findings indicate that government intervention promoting competitive market environments could benefit corporate owners in emerging markets where corporate governance is often substandard.

Keywords: Antitrust; Competition law; Firm performance; Investment policy; Emerging market (search for similar items in EconPapers)
JEL-codes: G14 G34 G38 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:56:y:2023:i:c:s1566014123000559

DOI: 10.1016/j.ememar.2023.101050

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