Corporate Governance and the Determinants of Investment

Klaus Gugler (), Dennis Mueller () and Burcin Yurtoglu

Journal of Institutional and Theoretical Economics (JITE), 2007, vol. 163, issue 4, 598-626

Abstract: We use investment-cash flow regressions to show that both asymmetric-information and agency problems are more severe in Continental Europe than in the Anglo-Saxon countries leading to too little investment by firms with attractive investment opportunities and too much by those with poor investment opportunities. Legal systems, accounting standards, and ownership structure systematically affect the investment-cash flow sensitivity. Cash flow coefficients are largest for family-controlled firms in Europe.

JEL-codes: G31 G32 O16 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (13)

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