Product Market Competition and Shareholder Rights: International Evidence


  • The authors acknowledge the financial support of the William E. Simon Graduate School of Business Administration. The authors are grateful to the Editor (John A. Doukas), an anonymous referee, Kose John, and Charu Raheja for valuable comments and suggestions. All errors and omissions are our own. Correspondence: Anzhela Knyazeva.


This paper examines the interaction between product market competition and international differences in shareholder rights in relation to firm performance and corporate policies. In contrast to existing literature, we provide evidence of complementarities between product market competition and country shareholder rights protections. The benefits of shareholder rights protections for firm performance are conditional on the presence of a competitive industry environment. We find that stronger shareholder rights protections are associated with better firm performance in competitive industries. However, this relation is not significant in concentrated industries. Consistent results are obtained from the analysis of key corporate policies.