Resource Curse: A Corporate Transparency Channel

Art Durnev and Sergei Guriev
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Art Durnev: University of Iowa [Iowa City]

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Abstract: We propose a new channel through which expropriation risk reduces capital allocation efficiency and decreases firm growth. We build an agency model of corporate disclosure when companies face risks of expropriation. The model predicts that in countries with insecure property rights, corporations mitigate the risk of expropriation by reducing transparency. We test this channel by employing a difference-in-difference approach. Using a panel of over 16,000 firms from 84 countries, we find that transparency of companies prone to expropriation is lower in countries with insecure property rights. The reduced transparency has an adverse effect on the efficiency of capital allocation and corporate growth.

Keywords: resource curse; expropriation; transparency; investment efficiency; growth (search for similar items in EconPapers)
Date: 2011-05-01
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03473798
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: The Resource Curse: A Corporate Transparency Channel (2007)
Working Paper: The Resource Curse: A Corporate Transparency Channel (2007)
Working Paper: The Resource Curse: A Corporate Transparency Channel (2007)
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