Trust, Owner Rights, Employee Rights and Firm Performance

31 Pages Posted: 27 Jul 2013

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 Warwick - Warwick Business School

Date Written: June/July 2013

Abstract

This is a study of variations in trust relationships according to institutional setting. A wide body of comparative institutional literature within economics and finance engages with trust. However, as most of this 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 trust increase firm performance, but that there is a trade‐off between the two as high levels of both reduce performance. Finally, 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

Suggested Citation

Goergen, Marc and Chahine, Salim and Brewster, Chris and Wood, Geoffrey, Trust, Owner Rights, Employee Rights and Firm Performance (June/July 2013). Journal of Business Finance & Accounting, Vol. 40, Issue 5-6, pp. 589-619, 2013. Available at SSRN: https://ssrn.com/abstract=2298968 or http://dx.doi.org/10.1111/jbfa.12033

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 Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

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