Impact of country-level corporate governance on entrepreneurial conditions

Faozi A Al Maqtari,Najib H Farhan,Hamood Mohd Al-Hattami,Amgad S D Khalid,Collins G Ntim

doi:10.1080/23311975.2020.1797261

Abstract

The present study examines the effect of country-level corporate governance (CLCG) and Directors’ Liability (DL) on Entrepreneurial Framework Conditions (EFCs) across 52 countries from 2014 up to 2017 using balanced panel data and Panel Correction Standard Error estimation. The results revealed that the CLCG has a significant impact across EFCs dimensions. Further, the results declared that the impact of DL is significant and positive in countries that have a high score of DL, but this impact is statistically negative in countries that have a low score of DL. The findings have momentous implications for entrepreneurs, policymakers, regulators, international organizations, and academicians. The study makes novel contributions to the strand literature underpinning country-level governance and the role of directors’ liability with EFCs. It brings a useful insight into a previously undocumented area of research highlighting the importance of CLCG dimensions and DL as important factors and determinants for better entrepreneurial conditions.

Highlights

Nowadays, policymakers, regulators, academicians, and investors have a considerable interest in country-level corporate governance (CLCG). Ngobo and Fouda (2012) stated that it has become more prominent in academic literature since the 1990s
Our core research question is to investigate to what extent that CLCG along with Directors’ Liability (DL) have a role in the level of entrepreneurial conditions across different countries around the world? We develop arguments on the tension caused by country-level corporate governance and formal institutions on entrepreneurship conditions
The results show that 0 > 1 yielded a negative coefficient to indicate that the impact of DL on entrepreneurial conditions in countries that have a high score of DL is positive and better than countries that have a low score of DL

Summary

Introduction

Policymakers, regulators, academicians, and investors have a considerable interest in country-level corporate governance (CLCG). Ngobo and Fouda (2012) stated that it has become more prominent in academic literature since the 1990s. Ngobo and Fouda (2012) stated that it has become more prominent in academic literature since the 1990s. It has become a mainstream concern all over the world and considered as an important pillar of the sound business environ ment (Bota-Avram, 2013). The World Bank has developed six country-level governance indicators (CLGIs) which are the most commonly used in the academic literature (Boţa-Avram et al, 2018). A good country-level governance serves as a promoter for fair regulatory frameworks, legitimacy, justice and market openness, transparent and accountable policy, and sovereignty of law which leads to sound business environment, better economic activity, and transparency in the economy (Avram, Grosanu & Rachisan, 2015)

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Results

Conclusion