Governance Transparency, Finance, and the Institutions of Capitalism: A Global Perspective

41 Pages Posted: 24 Jan 2015

See all articles by Raj Aggarwal

Raj Aggarwal

University of Akron; Federal Reserve Banks - Federal Reserve Bank of Cleveland; Kent State University; Kent State University Foundation

John W. Goodell

University of Akron - Department of Finance, College of Business Administration

Date Written: August 1, 2013

Abstract

This paper examines the importance of governance transparency as a foundation of modern finance and the national institutions of effective capitalism. Governance transparency has two major components, self-dealing transparency and corporate ownership transparency. Governance transparency reduces transactions costs and reduces asymmetric information problems by reducing instances of opportunistic behavior. We examine state of the art component measures of governance transparency and find that governance transparency is a significant influence on financial architecture, equity participation, and the cost of equity. We also document the effects of national trust and financing preferences on the demand for governance transparency. This overview and review should be of much interest to firm owners, managers, scholars, and policy-makers concerned with transparency and financial and economic development.

Keywords: Corporate Ownership, Transparency, Disclosure levels, National culture, Legal origin, Financial architecture, Social trust, Governance, Self dealing

JEL Classification: G10, G20, K2

Suggested Citation

Aggarwal, Raj and Goodell, John W., Governance Transparency, Finance, and the Institutions of Capitalism: A Global Perspective (August 1, 2013). Available at SSRN: https://ssrn.com/abstract=2554617 or http://dx.doi.org/10.2139/ssrn.2554617

Raj Aggarwal (Contact Author)

University of Akron ( email )

Akron, OH 44325-4803
United States

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Kent State University ( email )

College of Business Administration
Kent, OH 44242-0001
United States

Kent State University Foundation ( email )

Akron, OH 44325-4803
United States

John W. Goodell

University of Akron - Department of Finance, College of Business Administration ( email )

259 S. Broadway
Akron, OH 44325
United States

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