Governance Transparency and Capital Allocation: A Note

Authors


  • I appreciate the helpful comments from the anonymous reviewers, Steward Jones (the editor), Andrew Jackson and Yee Shih Phua. I also thank Marina Wang for research assistance.

Wen He (wen.he@unsw.edu.au) is a Lecturer in the School of Accounting, Australian School of Business, University of New South Wales.

Abstract

Habib (2008) shows that financial transparency, but not governance transparency, is related to efficiency in capital allocation. I argue that governance transparency is more likely to facilitate capital allocation in declining industries where agency problems intensify. Empirical evidence from a sample of 39 countries supports this argument.

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