Property Rights Protection, Corporate Transparency, and Growth

55 Pages Posted: 15 Nov 2008 Last revised: 1 Jul 2009

See all articles by Art Durnev

Art Durnev

University of Iowa - Henry B. Tippie College of Business

Vihang R. Errunza

McGill University - Desautels Faculty of Management

Alexander Molchanov

Massey University

Multiple version iconThere are 3 versions of this paper

Date Written: July 1, 2009

Abstract

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

Durnev, Artyom and Errunza, Vihang R. and Molchanov, Alexander, Property Rights Protection, Corporate Transparency, and Growth (July 1, 2009). Available at SSRN: https://ssrn.com/abstract=1301882 or http://dx.doi.org/10.2139/ssrn.1301882

Artyom Durnev (Contact Author)

University of Iowa - Henry B. Tippie College of Business ( email )

12348 DEWHURST AVE
HENRICO, VA Henrico 23233-7848
United States
3193831295 (Phone)

Vihang R. Errunza

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada
514-398-4056 (Phone)
514-398-3876 (Fax)

Alexander Molchanov

Massey University ( email )

Auckland
New Zealand

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