Firm Investments and Corporate Governance in Asian Emerging Markets

24 Pages Posted: 26 Jun 2015

See all articles by Tanweer Hasan

Tanweer Hasan

Roosevelt University

Palani-Rajan Kadapakkam

University of Texas at San Antonio - Department of Finance

P C Kumar

American University

Date Written: June 26, 2015

Abstract

The quality of corporate governance has been shown to have wide-ranging implications, e.g., on the performance of stock markets and on exchange rates. This study investigates whether the quality of corporate governance in a country impacts investment decisions made at the micro level of the firm. The study focuses on Asian emerging markets since they have widely varying standards of corporate governance. Based on eight measures of corporate governance, four aggregate indices of corporate governance (business environment, legal environment, investor rights, and an overall measure) are developed for seven countries in the sample drawing on data from published sources. The results indicate that improvements in corporate governance mitigate the dependency of firm investments on their internal resources and facilitate access by firms to capital markets.

Keywords: corporate governance; firm investments; emerging markets; investment-cashflow sensitivity

JEL Classification: G15, G30, G31

Suggested Citation

Hasan, Tanweer and Kadapakkam, Palani-Rajan and Kumar, Parmeswar C, Firm Investments and Corporate Governance in Asian Emerging Markets (June 26, 2015). Multinational Finance Journal, Vol. 12, No. 1/2, p. 21-44, 2008, Available at SSRN: https://ssrn.com/abstract=2623426

Tanweer Hasan (Contact Author)

Roosevelt University ( email )

Chicago, IL 60605
United States

Palani-Rajan Kadapakkam

University of Texas at San Antonio - Department of Finance ( email )

San Antonio, TX 78249
United States

Parmeswar C Kumar

American University ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States

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