Presentation on theme: "Macroeconomic Implications of Corporate Governance 1 st presentation Mairhofer Bianca, 0757259 Supervisor: Dr. Johann Scharler."— Presentation transcript:
Macroeconomic Implications of Corporate Governance 1 st presentation Mairhofer Bianca, Supervisor: Dr. Johann Scharler
Table of Contents Literature Review Theory CG Indices: Shareholder rights protection Minority shareholder protection Creditor rights protection Sample and Variables
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
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
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.
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
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