Corporate Stakeholders and Trust

41 Pages Posted: 12 Aug 2008 Last revised: 5 Feb 2014

See all articles by Marc Goergen

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Date Written: July 2008

Abstract

To our knowledge, this is the first paper that investigates the links between trust, the institutional setting (in terms of employment protection legislation (EPL) and investor rights) and studies the impact of all three on economic performance. In line with the previous literature (e.g. Knack and Keefer (1997), Zak and Knack (2001)), we find that trust has a positive impact on GDP per capita growth. Our novel results are twofold. First, we find that EPL and investor rights have a negative relationship and that both (although the latter to a lesser extent) are substitutes for trust. Second, all three variables have a positive effect on economic growth.

Keywords: Corporate governance, trust, investor protection, employment protection legislation, institutions, economic growth

JEL Classification: G34, K20, O16

Suggested Citation

Goergen, Marc, Corporate Stakeholders and Trust (July 2008). ECGI - Finance Working Paper No. 213/2008. Available at SSRN: https://ssrn.com/abstract=1156102 or http://dx.doi.org/10.2139/ssrn.1156102

Marc Goergen (Contact Author)

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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