Competition and Corporate Governance: Substitutes or Compliments? Evidence from the Warsaw Stock Exchange

Irena Grosfeld and Thierry Tressel ()

No 369, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: In this paper we analyze the impact of product market competition and ownership structure on corporate performance. We focus on the firms listed on the Warsaw Stock Exchange, which are either privatised or newly created firms. First, we study the separate effects of competition and ownership concentration on firm level productivity growth. Next, we investigate their interaction: are they substitutes or complements? We take care of the crucial problem of potential endogeneity of explanatory variables by using GMM estimators proposed by Arellano and Bond (1991). We also control for several types of selection bias that could affect the productivity levels. Moreover, we control for industry fixed effects affecting the rate of growth of productivity. Our results show that product market competition has a positive and significant impact on performance. Concerning the effect of ownership concentration, we find a U-shaped relationship with performance. Firms with relatively dispersed ownership (no shareholder with more than 20 per cent of voting shares) and firms, in which one shareholder has more than 50 per cent of voting shares, have higher productivity growth than firms with an intermediate level of ownership concentration. This correlation between concentration of ownership and productivity growth is not explained by the type of the controlling shareholder. Finally, product market competition and good governance te and to reinforce each other rather than to be substitutes. Competition has no significant effect on performance for the firms with 'poor' governance; on the contrary, it has significant positive effect in the case of firms with 'good' corporate governance.

JEL-codes: D24 G32 L1 P2 (search for similar items in EconPapers)
Pages: pages
Date: 2001-03-01
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp383.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp383.pdf [302 Found]--> https://wdi.umich.edu/files/Publications/WorkingPapers/wp383.pdf)

Related works:
Working Paper: Competition and Corporate Governance: Substitutes or Complements ? Evidence from the Warsaw Stock Exchange (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wdi:papers:2001-369

Access Statistics for this paper

More papers in William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan 724 E. University Ave, Wyly Hall 1st Flr, Ann Arbor MI 48109. Contact information at EDIRC.
Bibliographic data for series maintained by WDI ().