Trust, Owner Rights, Employees and Firm Performance

53 Pages Posted: 22 Jul 2012 Last revised: 9 Nov 2018

See all articles by Marc Goergen

Marc Goergen

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

Salim Chahine

American University of Beirut - Olayan School of Business

Chris Brewster

Henley Management College - Human Resource Management

Geoffrey Wood

University of Sheffield - School of Management

Date Written: July 21, 2012

Abstract

This is a study of variations in trust relations according to institutional setting. A wide body of comparative institutional literature within economics and finance engages with trust. However, as most comparative institutional literature uses macro-level data and/or stylistic ideal types, it normally neglects intra-firm trust. This paper redresses this lacuna by using both macro-level data and comparative firm-level evidence. We found that both country trust and firm-level trust have a positive impact on performance, and that they act as substitutes for each other. Both employee rights and investor rights are negatively correlated with country trust.

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

JEL Classification: G34, K20, O16

Suggested Citation

Goergen, Marc and Chahine, Salim and Brewster, Chris and Wood, Geoffrey, Trust, Owner Rights, Employees and Firm Performance (July 21, 2012). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 336/2012. Available at SSRN: https://ssrn.com/abstract=2115108 or http://dx.doi.org/10.2139/ssrn.2115108

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 ECARES ULB CP 114
B-1050 Brussels
Belgium

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

Salim Chahine

American University of Beirut - Olayan School of Business ( email )

Bliss Street
Beirut 1107 2020
Lebanon
961-1-374-374 (Phone)

Chris Brewster

Henley Management College - Human Resource Management ( email )

Greenlands
Henley-on-Thames
Oxfordshire RG9 3AU, England
United Kingdom

Geoffrey Wood

University of Sheffield - School of Management ( email )

9 Mappin Street
Sheffield, S1 4DT
United Kingdom
0114 22 23346 (Phone)

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