Journal of International Business Studies

, Volume 40, Issue 9, pp 1533–1562 | Cite as

Property rights protection, corporate transparency, and growth

  • Art Durnev
  • Vihang ErrunzaEmail author
  • Alexander Molchanov


In countries with secure property rights, corporate transparency improves investment efficiency and increases growth by alleviating information asymmetry. However, in countries with insecure property rights, greater transparency can increase the risk of government expropriation. Therefore some firms that would benefit most from transparency cannot take full advantage of it, as they set sub-optimal transparency levels. Using data from 59 industries in 69 countries, we find that in countries with weak property rights protection, industries that would benefit the most from transparency exhibit worse investment efficiency and grow more slowly than industries that can efficiently operate at minimal levels of transparency.


corporate governance political risk business performance financial and industrial structure 



We are grateful for helpful comments and suggestions by the editor, Lemma Senbet, anonymous referees, Henk Berkman, Stijn Claessens, Amrita Nain, Maria Petrova, Bernard Yeung, and the participants at the 2009 Darden International Finance Conference, Concordia University seminar, and Massey University seminar. Art Durnev's research is supported by Institut de Finance Mathématique de Montréal (IFM2) and the Social Sciences & Humanities Research Council of Canada (SSHRC). Vihang Errunza's research is supported by the Bank of Montreal chair in finance and banking, IFM2 and SSHRC. We thank Pat Akey for superb research assistance.


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Copyright information

© Academy of International Business 2009

Authors and Affiliations

  • Art Durnev
    • 1
  • Vihang Errunza
    • 1
    Email author
  • Alexander Molchanov
    • 2
  1. 1.Desautels Faculty of Management, McGill UniversityMontrealCanada
  2. 2.Department of Economics and FinanceMassey UniversityAucklandNew Zealand

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