Trust,Owner Rights,Employee Rights and Firm Performance |
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| Authors: | Marc Goergen Salim Chahine Chris Brewster Geoffrey Wood |
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| Institution: | 1. Address for correspondence: Marc Goergen, Cardiff Business School, Cardiff University, Aberconway Building, Colum Drive, Cardiff CF10 3EU, UK.;2. e‐mail: goergenm@cf.ac.uk;3. The first author is from the Cardiff Business School, Cardiff University, UK and the European Corporate Governance Institute based in Belgium. The second author is from the Olayan School of Business, American University of Beirut, Lebanon. The third author is from the University of Reading Business School, UK, and the fourth author is from the Warwick Business School, University of Warwick, UK. Earlier versions of this paper were entitled “Corporate Stakeholders and Trust”. We are grateful to Leonidas Michelis, to the participants at the 6th International Conference on Corporate Governance organized by the Centre for Corporate Governance Research (Birmingham Business School) for helpful comments and suggestions. We would also like to thank the participants at the 2012 JBFA Capital Markets Conference at Goethe University, Frankfurt and those at the 6th EIASM Workshop on Trust Within and Between Organizations. Finally, we are indebted to an anonymous referee as well as the Editors. (Paper received December, 2009;4. revised version accepted May, 2013). |
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| Abstract: | This is a study of variations in trust relationships according to institutional setting. A wide body of comparative institutional literature within economics and finance engages with trust. However, as most of this literature uses macro‐level data and/or stylistic ideal types, it normally neglects intra‐firm trust. This paper redresses this lacuna by using both macro‐level data and comparative firm‐level evidence. We found that both country trust and firm trust increase firm performance, but that there is a trade‐off between the two as high levels of both reduce performance. Finally, both employee rights and investor rights are negatively correlated with country trust. |
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| Keywords: | corporate governance trust investor protection employment protection legislation institutions and economic growth |
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