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Governance Transparency and Capital Allocation: A Note
Author(s) -
HE WEN
Publication year - 2011
Publication title -
abacus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.632
H-Index - 45
eISSN - 1467-6281
pISSN - 0001-3072
DOI - 10.1111/j.1467-6281.2011.00333.x
Subject(s) - transparency (behavior) , corporate governance , argument (complex analysis) , capital (architecture) , accounting , agency (philosophy) , business , economics , capital allocation line , finance , microeconomics , political science , law , geography , archaeology , profit (economics) , biochemistry , chemistry , philosophy , epistemology
Habib (2008) shows that financial transparency, but not governance transparency, is related to efficiency in capital allocation. I argue that governance transparency is more likely to facilitate capital allocation in declining industries where agency problems intensify. Empirical evidence from a sample of 39 countries supports this argument.