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Corporate Governance, Finance, and the Real Sector
Published online by Cambridge University Press: 02 November 2012
Abstract
We present a theory of the linkages between corporate governance, corporate finance, and the real sector of an economy. Using a structural model of industry equilibrium with endogenous entry, we show that poor corporate governance leads to low levels of competition, and to firms with high insider ownership and leverage. In contrast, good corporate governance promotes the adoption of more efficient technologies and development of sectors more exposed to moral hazard. We use our model to study equity market liberalization, and we show that liberalizations facilitate entry and adoption of more productive technologies, especially in countries with good corporate governance.
- Type
- Research Articles
- Information
- Journal of Financial and Quantitative Analysis , Volume 47 , Issue 6 , December 2012 , pp. 1187 - 1214
- Copyright
- Copyright © Michael G. Foster School of Business, University of Washington 2012
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