To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation

Artyom Durnev () and E. Han Kim

No 2004-7, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: Data on corporate governance and disclosure practices reveal wide within-country variation that decreases with the strength of investors' legal protection. A simple model identifies three firm attributes related to that variation: investment opportunities, external financing, and ownership structure. Using firm-level governance and transparency data in 27 countries, we find that all three firm attributes are related to the quality of governance and disclosure practices and that firms with higher governance and transparency rankings are valued higher in stock markets. All relations are stronger in less investor-friendly countries, demonstrating that firms adapt to poor legal environments to establish efficient governance practices.

Keywords: Corporate Governance; Investment Opportunities; External Financing; Ownership; Legal Environment; Valuation (search for similar items in EconPapers)
JEL-codes: G32 K23 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2004-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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Journal Article: To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2004-7

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