Globalisation, Corporate Governance and Firm Productivity

Byung S. Min and Russell Smyth

No 55-12, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: We examine the relationship between globalisation, corporate governance and firm productivity by breaking down total effects into direct and indirect effects. The estimation results, using longitudinal data from Korea, indicate that the positive effect of liberalising equity ownership on firms’ total factor productivity (TFP) was reinforced by indirect managerial effects when a firm improved its corporate governance. Our findings also confirm that the interaction of the managerial effect with increased foreign equity ownership is more significant than interaction with exports, suggesting that liberalising foreign investment in the host market is more effective in capitalising on the potential benefits of corporate governance reform than increasing exports to overseas markets, reflected in learning by exporting.

Keywords: corporate governance reform; globalisation; productivity; Korea (search for similar items in EconPapers)
Pages: 41 pages
Date: 2012-09
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