Corporate governance, market competition and investment decisions in Mexican manufacturing firms

Antonio Ruiz-Porras and Celina Lopez-Mateo

MPRA Paper from University Library of Munich, Germany

Abstract: We study how competition and corporate governance may explain investment decisions of Mexican manufacturing firms. We develop the study with indexes of market concentration and agency costs and OLS regressions. The analysis uses longitudinal census data. Our results suggest that investment is better explained by the Dominance Index, a Mexican measure of concentration, than by the Herfindahl-Hirschman one. They also suggest that agency costs (proxy for the degree of separation of ownership and control), and market competition may encourage investment decisions. Furthermore they suggest an inverse relationship between market competition and agency costs. We believe that our findings support the hypothesis that competition may be an alternative mechanism to encourage corporate practices in emerging economies.

Keywords: Corporate governance; competition; investment; Mexico; manufacturing, economic development (search for similar items in EconPapers)
JEL-codes: G34 L22 L60 O16 (search for similar items in EconPapers)
Date: 2011-01-27
New Economics Papers: this item is included in nep-bec, nep-com, nep-dev and nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:28452

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