Corporate Governance Quality: Trends and Real Effects

By Kenichi Ueda, Gianni De Nicolo, Luc Laeven

December 1, 2006

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Kenichi Ueda, Gianni De Nicolo, and Luc Laeven. Corporate Governance Quality: Trends and Real Effects, (USA: International Monetary Fund, 2006) accessed November 9, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper constructs a composite index of corporate governance quality, documents its evolution from 1994 through 2003 in selected emerging and developed economies, and assesses its impact on aggregate and corporate growth and productivity. Our investigation yields three main findings. First, corporate governance quality in most countries has overall improved, although to varying degrees and with a few notable exceptions. Second, the data exhibit cross-country convergence in corporate governance quality with countries that score poorly initially catching up with countries with high corporate governance scores. Third, the impact of improvements in corporate governance quality on traditional measures of real economic activity-GDP growth, productivity growth, and the ratio of investment to GDP- is positive, significant, and quantitatively relevant, and the growth effect is particularly pronounced for industries that are most dependent on external finance.

Subject: Corporate governance, Financial sector development, Market capitalization, Stock markets, Total factor productivity

Keywords: CGQ Index, Economic activity, Growth rate, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/293
Stock No:

WPIEA2006293
ISBN:

9781451865530
ISSN:

1018-5941

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