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CORRUPTION AND CORPORATE FINANCE PATTERNS: AN INTERNATIONAL PERSPECTIVE
Author(s) -
Du Julan
Publication year - 2008
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2008.00396.x
Subject(s) - corporate governance , language change , corporate finance , government (linguistics) , equity (law) , finance , economics , equity financing , business , politics , perspective (graphical) , financial system , accounting , political science , art , debt , linguistics , philosophy , literature , law , artificial intelligence , computer science
. This study demonstrates the importance of government corruption in shaping corporate finance patterns across countries. Corruption contributes to a more prevalent and higher degree of corporate equity ownership concentration and more reliance on bank financing in raising external finance. It argues that corporate governance under corrupt governments is particularly poor. Firm management, taking advantage of political capital acquired through bribery, is especially powerful in expropriating from outside investors. Ownership concentration and reliance on bank financing are means of mitigating the corporate governance problem under a corrupt government.