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Corporate governance and economic performance: A closer look

By Øyvind Bøhren and Bernt Arne Ødegaard


Using very rich and accurate data for Oslo Stock Exchange firms covering the period 1989– 1997, we find that ownership structure matters for economic performance, that insider ownership matters the most, that ownership concentration destroys value, and that direct ownership is superior to investing through intermediaries like institutions and the state. Performance decreases with increasing board size, with the use of non–voting shares, and when firms finance with more debt and pay higher dividends. Although these effects are very robust in single–equation models and thereby suggest that our sample firms have suboptimal corporate governance mechanisms, we find that most of the significant relationships disappear in simultaneous equations models. We suspect that this apparent indication of optimal governance is driven by weak instruments in the simultaneous system

Topics: Corporate Governance, Economic Performance, Norwegian Equity Market, Simultaneous Equations. JEL Codes
Year: 2001
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