Property Rights Protection, Corporate Transparency, and Growth
55 Pages Posted: 15 Nov 2008 Last revised: 2 Jul 2009
Date Written: July 1, 2009
In countries with secure property rights, corporate transparency improves investment efficiency and increases growth by alleviating information asymmetry. However, in countries with insecure property rights, greater transparency can increase the risk of government expropriation. Therefore, some firms that would benefit most from transparency cannot take full advantage of it, as they set sub-optimal transparency levels. Using data from 59 industries in 69 countries, we find that in countries with weak property rights protection, industries that would benefit the most from transparency exhibit worse investment efficiency and grow slower compared to industries that can efficiently operate at minimal levels of transparency.
Keywords: expropriation, transparency, investment
JEL Classification: G38
Suggested Citation: Suggested Citation