Does Good Corporate Governance Lead to Stronger Productivity Growth?

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Abstract

This study investigates the impact of corporate governance and product market competition on total factor productivity growth in Germany and the UK.For Germany, the prototype of a bank-based governance system, productivity grows faster in firms controlled by financial institutions (in particular, banks and insurance companies) and intense competition reinforces this beneficial impact. Furthermore, the importance of the German creditors (mostly banks) for productivity growth is particularly significant in firms which experience financial difficulties or are in financial distress.For the UK, a market-based governance system, we do not find any evidence that creditors play a disciplinary role.Still, there is strong evidence that shareholder control (by insiders, private outsiders and financial institutions) leads to substantial increases in productivity in poorly performing firms.We also find evidence that product market competition is a substitute for blockholder control in the UK.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages41
Volume2002-89
Publication statusPublished - 2002

Publication series

NameCentER Discussion Paper
Volume2002-89

Keywords

  • corporate governance
  • productivity

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  • Cite this

    Koeke, J., & Renneboog, L. D. R. (2002). Does Good Corporate Governance Lead to Stronger Productivity Growth? (CentER Discussion Paper; Vol. 2002-89). Finance.