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Macroeconomic Implications of Corporate Governance 1 st presentation Mairhofer Bianca, 0757259 Supervisor: Dr. Johann Scharler.

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Presentation on theme: "Macroeconomic Implications of Corporate Governance 1 st presentation Mairhofer Bianca, 0757259 Supervisor: Dr. Johann Scharler."— Presentation transcript:

1 Macroeconomic Implications of Corporate Governance 1 st presentation Mairhofer Bianca, Supervisor: Dr. Johann Scharler

2 Table of Contents  Literature Review  Theory  CG Indices:  Shareholder rights protection  Minority shareholder protection  Creditor rights protection  Sample and Variables

3 Literature Review  Theory  Companies with bad CG respond more to aggregate shocks  Reasons: Manager hirer more people as necessary during booms because of utility out of “power” Manager firer more people than necessary during recessions because of fear of losing the job  Main reference: Philippon, T. (2005, September, JEDC) who developed a RBC – model which could explain up to a third of aggregate volatility

4  CG indices  Shareholder rights protection (=SRP) Appointment rights index Decision rights index Trusteeship index Transparency index  Minority shareholder rights protection (=MSRP) Minority shareholders appointment rights index Minority shareholders decision rights index Minority shareholders trusteeship rights index Minority shareholders affiliation rights index Literature Review

5  CG indices  Creditor rights protection (=CRP) Debtor – vs. Creditor oriented code Automatic stay on the assets Secured creditors are ranked first Creditor approval of bankruptcy Appointment of official to manage reorganization procedure  The higher each index, the higher is each protection.

6  Variables  Dependent variables: Macroeconomic variable: standard deviation of GDP Other possible variables: standard deviation of unemployment rate or industrial production  Independent variables: 3 Corporate Governance indices: SRP (max=32) MSRP (max=27) CRP (max=5) Sample and Variables

7  Sample  Data from the homepages of EC, ECB, IMF, OECD and the data of the paper “A Corporate Governance Index: Convergence and Diversity of National Corporate Governance Regulations” (Martynova, M., & Renneboog, L. (2010, February), JEL)  15 OECD countries  4 intervals each with a period of 5 years (1990 – 2009)  Calculation GDP growth rate:  Calculation standard deviation:  Equation for estimation: Sample and Variables

8 Thank you for your attention!


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