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Informal institutions and firm valuation.

Hartwell, C. A. and Malinowska, A.P., 2019. Informal institutions and firm valuation. Emerging Markets Review, 40 (September), 100603.

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Institutional Distance to Here November blinded EMR_revision final clean.pdf - Accepted Version
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DOI: 10.1016/j.ememar.2019.03.001


Research on the effects of the institutional environment on firm market valuation have concentrated on formal institutions and in particular legal frameworks. However, changes in formal institutions may have little to no effect on the deeply ingrained socio-economic processes which determine the way of conducting business in a country. In such a situation, informal institutions may play a much more important role for firms. Using property rights as an example, this paper models the impact of formal and informal institutional changes on the market growth potential of Polish firms. Our examination indicates that Poland's formal and informal institutions diverge significantly, with changes in informal institutions shaping market worth much more than binding formal frameworks. We conclude that firm valuation in an unstable institutional environment is due mostly to developments in informal property rights and other factors external to the firm, with comparatively little effect of firm-specific attributes.

Item Type:Article
Group:Bournemouth University Business School
ID Code:32403
Deposited By: Symplectic RT2
Deposited On:17 Jun 2019 15:22
Last Modified:14 Mar 2022 14:16


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