How Well do Institutional Theories Explain Firms' Perceptions of Property Rights?

By Meghana Ayyagari, Asli Demirgüç-Kunt, Vojislav Maksimovic. 2005

135 citations recorded by the source corpus.

The authors examine how well several institutional and firm-level factors and their interactions explain firms' perceptions of property rights protection. Their sample includes private and public firms that vary in size from very small to large in 62 countries. Together, the institutional theories they investigate account for approximately 70 percent of the country-level variation, indicating that the literature is addressing first-order factors. Firm-level characteristics such as legal organization and ownership structure are comparable to institutional factors in explaining variation in property rights protection. A country's legal origin and formalism index predict property rights variation better than its openness to international trade, its religion, its ethnic diversity, natural endowments or its political system. However, these results are driven by the inclusion of former socialist economies in the sample. When the authors exclude the former socialist economies, legal origin explains considerably less than openness to trade and endowments. Examining a broader set of variables for robustness, they again find that when they exclude former socialist countries, legal origin explains comparatively little of the variation in perceptions of judicial efficiency, corruption, taxes and regulation, street crime, and financing.

Subfields: Accounting, Demography, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/295453b65eadbfaa01dcf2cdbb3e40d431842d52

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Citations in the corpus

Identifying Constraints to Financial Inclusion and Their Impact on GDP and Inequality: A Structural Framework for Policy (2015, background): “For firms, access to finance is positively associated with innovation, job creation, and growth (Beck et al., 2005; Ayyagari et al., 2008).”
Growth Identification and Facilitation: The Role of the State in the Dynamics of Structural Change (2010, unknown): “45 Ayyagari et al. (2005) present the mean reported values for a number of investment climate variables in a sample of over 6,000 firms in 80 countries.”
Small and Medium Enterprises Across the Globe (2007, methodology): “This methodology has been recently used in the finance literature in the context of examining determinants of proper rights protection (Ayyagari et al., 2005) and the importance of country and firm characteristics in explaining corporate governance (Stulz et al., 2004).12 In this paper, we use this…”
The Sovereign Wealth Fund Discount: Evidence from Public Equity Investments (2015, unknown): “…which are free 18 The same metric of the level of democracy derived from the Polity IV dataset has been widely used in the ‘law and finance’ literature, as in Ayyagari, Demirgüç-Kunt, and Maksimovic (2006) and Rodrik and Wacziarg (2005).”
Corruption in bank lending to firms : cross-country micro evidence on the beneficial role of competition and information sharing (2009, background): “As expected, the macro-corruption measures are negatively associated with corruption in lending and statistically significant in model (3).”
How Important Are Financing Constraints? The Role of Finance in the Business Environment (2008, background): “Ayyagari, Demirguc-Kunt, and Maksimovic (2008) argue that Transition economies are fundamentally different from other countries in their perceptions of protection of property rights.”
Small vs. Young Firms Across the World: Contribution to Employment, Job Creation, and Growth (2011, unknown): “Of the 54 counties for which SME250 share of manufacturing labor force is reported in Ayyagari et al. (2007), only 30 countries overlapped with the ES database. When we include the 44 countries for which we have additional data from sources other than the ES, we find the SME250 Manufacturing measure”
The FDI location decision: does liberalization matter? (2007, background): “Furthermore, it has been shown that countries that are more open to trade are likely to have better property rights protection (Ayyagari et al., 2005), better macroeconomic policies and be less prone to corruption (Bonaglia et al., 2001; Gokcekus and Knorich, 2006).”