FINANCIAL AND LEGAL CONSTRAINTS TO FIRM GROWTH 金融和法律约束，企业成长.pptVIP

Financial and Legal Institutions and Firm Size Thorsten Beck, Asli Demirguc-Kunt and Vojislav Maksimovic Motivation What determines firm size and how is this relevant for SME research? Firm size and institutions It may be that in the absence of developed institutions, it is optimal for firms to stay small. Then subsidizing SMEs to make them grow may not be successful or may even be counterproductive unless institutional shortcomings are addressed first. Institutional Determinants of Firm Size Corporate finance literature suggests that financial and legal institutions could affect firm size in opposing ways If institutions are underdeveloped, firms’ internal markets may be more efficient than public markets – inverse relationship. But large firms are also subject to agency problems which are more difficult to control if institutions are underdeveloped The relationship between firm size and institutional development depends on the relative importance of these effects Focus on largest firms Even if with underdeveloped institutions, it is optimal for firms to substitute internal markets for external markets and become larger, financing constraints may prevent this – blurring the relationship. Thus, to test if transactions costs or agency costs are more dominant, we need to focus on firms that can determine their size without such constraints Recent papers suggest that it is the largest firms that are likely to be the least constrained. In this paper we ... Use firm-level data for 100 largest manufacturing firms in 44 countries averaged over 1988-97 (Worldscope) to examine Institutional determinants of firm size Are the largest firms in countries with developed financial systems larger? Is there a positive or negative relationship between firm size and the efficiency of the legal system? Are these relationships different in industries with a higher external financing need or higher ratio of intangible assets? Data Dependent variable – total sales of firm in US$ In