Abstract
We document that corporate governance and trust are substitute by showing that the positive effect of corporate governance reforms on corporate financing and investment is decreasing with country-level trust (and vice versa). Our finding is robust to an array of robustness tests and suggests that institutional enhancement (via strengthened firm-level governance practices) and societal trust are effective in alleviating the agency cost of capital accumulation and allocation. Our study highlights a condition under which government intervention is optimal and indicates that countries can offset the negative lack-of-trust effect on economic outcomes.
| Original language | English |
|---|---|
| Publication status | Published - 7 Jul 2021 |
| Event | 2021 Accounting and Finance Association of Australia and New Zealand Annual Conference (AFAANZ 2021) - Virtual Duration: 5 Jul 2021 → 7 Jul 2021 https://tcm.eventsair.com/QuickEventWebsitePortal/afaanz-2021/program/Agenda https://www.afaanz.org/ https://www.afaanz.org/2021-afaanz-virtual-conference |
Conference
| Conference | 2021 Accounting and Finance Association of Australia and New Zealand Annual Conference (AFAANZ 2021) |
|---|---|
| Abbreviated title | 2021 AFAANZ Annual Conference |
| Period | 5/07/21 → 7/07/21 |
| Internet address |
Bibliographical note
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