Property Rights Protection, Corporate Transparency, and Growth

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 and lower the benefits of transparency. 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, grow slower, practice worse governance and have less informative earnings compared to industries that can efficiently operate at minimal levels of transparency.

Keywords: Transparency, Investment Efficiency, Growth, Property Rights

JEL Classification: G30, G15