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Firm Growth and Legal Environment
Author(s) -
Miroshnychenko Ivan,
Bozzi Stefano,
Barontini Roberto
Publication year - 2019
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/ecno.12116
Subject(s) - leverage (statistics) , investor protection , cash flow , business , sample (material) , empirical evidence , monetary economics , finance , economics , corporate governance , philosophy , chemistry , chromatography , epistemology , machine learning , computer science
An effective country‐level legal environment is crucial for promoting access to finance, development, and ultimately economic growth. Based on a sample of large companies listed in Continental Europe in the period 2002–2011, this study suggests that investor protection level is related to firm growth. Specifically, investor protection: a) enhances the growth rate of the firm; b) affects growth sensitivity to leverage and cash flow. These results provide empirical support to recommendations by policy makers advocating for increased investor protection in Europe.