Ownership and Allocation of Capital: Evidence from 44 Countries

Johan Eklund () and Sameeksha Desai ()

Journal of Institutional and Theoretical Economics (JITE), 2014, vol. 170, issue 3, 427-452

Abstract: In an efficient economy, capital should be quickly (re)allocated from declining firms and sectors to more profitable investment opportunities. This process is affected by the concentration of corporate control, which in turn is affected by market institutions. We employ a panel of 11,984 firms across 44 countries to estimate the functional efficiency of capital markets. We adapt a measure for the efficiency of capital allocation using the accelerator principle. Our empirical results show weak property rights and highly concentrated ownership reduce the functional efficiency of capital markets.

JEL-codes: G32 L20 P00 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.1628/093245613X14006508036247000000

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