Firm growth and political institutions

Narjess Boubakri, Sadok El Ghoul, Walid Saffar

Research output: Journal article publicationJournal articleAcademic researchpeer-review

10 Citations (Scopus)

Abstract

ÂUsing a large sample of firms from 46 countries, we investigate the impact of political institutions on firm growth. We find that tighter political constraints stimulate firm growth and that this positive impact is more pronounced in weak legal environments. Our results are economically significant and robust to a number of sensitivity tests, including alternative proxies for political institutions, alternative measures of firm growth, additional controls, firm- versus country-level regressions, as well as when we address the endogeneity of political constraints. Our results suggest that reforms aimed at improving a country's political institutions can significantly impact firm growth, and that it is indeed through improved political institutions that firms are incentivized to invest in profitable projects.
Original languageEnglish
Pages (from-to)104-125
Number of pages22
JournalJournal of Multinational Financial Management
Volume31
DOIs
Publication statusPublished - 1 Jan 2015

Keywords

  • Firm growth
  • Legal institutions
  • Political institutions

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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