Working Paper: NBER ID: w11912
Authors: Ren M. Stulz
Abstract: For many countries, the most significant barriers to trade in financial assets have been knocked down. Yet, the financial world is not flat because poor governance prevents firms from being widely held and from taking full advantage of financial globalization. Poor governance has implications for corporate finance as well as for macroeconomics. I show that poor governance in Eastern Europe is accompanied, as expected, by high corporate ownership concentration, low firm valuation, poor financial development, and low foreign participation.
Keywords: No keywords provided
JEL Codes: G11; G15; G32; F30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Poor governance (D73) | High corporate ownership concentration (G34) |
| High corporate ownership concentration (G34) | Lower firm valuations (G32) |
| High corporate ownership concentration (G34) | Reduced foreign participation (F23) |
| Lower firm valuations (G32) | Reduced foreign investment (F21) |
| Twin agency problems (D82) | Limited financial globalization benefits (F69) |