Ownership structure, firm performance and corruption: An empirical analysis of EU countries

Abstract

The aim of the paper is to analyse the interaction effect corruption play in the relation between ownership structure and firm performance. This paper analyses whether and how the Corruption Perception Index affects the relationship between corporate performance and ownership structure in 2,035 firms operating in eight European countries (Denmark, Sweden, Germany, France, Finland, The Netherland, Italy, and Spain) during 2010-2017 period (10,915 firm year observations). Our findings show that level of corruption perceived by investors is relevant to the relationship between ownership concentration and firm performance. This result suggests that institutional context variables should be taken into consideration from corporate governance scholars in their empirical investigations. The contribution of the paper is twofold: first, our results evidence the relevant role played by the interaction effects between firm-level and country-level variables; second, it suggests important managerial and policy implications related to the interaction between internal and external corporate governance mechanisms.