Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25698
Authors: 
Eklund, Johan E.
Desai, Sameeksha
Year of Publication: 
2008
Series/Report no.: 
Jena economic research papers 2008,012
Abstract: 
In an efficient economy, capital should be quickly (re)allocated from declining firms and sectors to more profitable investment opportunities. This process is affected by the concentration of corporate control, which in turn is affected by market institutions. We employ a panel of 12,000 firms across 44 countries to estimate the functional efficiency of capital markets. We adapt a measure for the efficiency of capital allocation using the accelerator principle. Our empirical results show weak property rights and highly concentrated ownership reduce the functional efficiency of capital markets. Findings support the economic entrenchment hypothesis but not the legal origins hypothesis.
Subjects: 
Allocation of capital
accelerator principle
ownership
functional efficiency
economic entrenchment
JEL: 
G32
L20
P00
Document Type: 
Working Paper

Files in This Item:
File
Size
789.76 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.