When is Two Really Company? The Effects of Competition and Regulation on Corporate Governance

56 Pages Posted: 26 Mar 2008

See all articles by Krishna Udayasankar

Krishna Udayasankar

Nanyang Business School, Nanyang Technological University

Shobha S. Das

Nanyang Business School, Nanyang Technological University

Chandrasekhar Krishnamurti

University of South Australia

Date Written: March 18, 2008

Abstract

In this paper we bring together agency, stakeholder, institutional and resource-dependence theories to study the direct and interactive effects of country regulation and competition on two dimensions of corporate governance: the overall quality of corporate governance of firms in a country, and firm-to-firm variations in corporate governance. Interactive conditions are more representative of the real-world context of corporate governance, and the contradictory pressures that firms face in such interactive conditions are better explained through the use of multiple theories of corporate governance. Using a dataset that spans 15 countries and includes 463 firms, we find that firm corporate governance is better in conditions where either regulation or competition is well-developed, by comparison with interactive conditions. We also find that while regulation enhances within- country convergence, it is likely that competition serves to enhance across-country convergence.

Keywords: Competition, Regulation, firm-level corporate governance, convergence

JEL Classification: G18, G38, G39

Suggested Citation

Udayasankar, Krishna and Das, Shobha Sasidharan and Krishnamurti, Chandrasekhar, When is Two Really Company? The Effects of Competition and Regulation on Corporate Governance (March 18, 2008). Available at SSRN: https://ssrn.com/abstract=1108563 or http://dx.doi.org/10.2139/ssrn.1108563

Krishna Udayasankar

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

Shobha Sasidharan Das

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

Chandrasekhar Krishnamurti (Contact Author)

University of South Australia ( email )

37-44 North Terrace, City West Campus
Adelaide, South Australia 5001
Australia

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