Monday, January 23, 2012

2 February 2012: Institutions, Corporate Governance and Capital Flows

Rahul Mukherjee
The Graduate Institute, Geneva

Countries with weaker domestic institutions hold fewer foreign assets
and exhibit concentrated corporate ownership. An equilibrium business
cycle model of international capital flows with corporate governance
frictions between outside and insider investors explains both
phenomena. Investment dynamics under insider control leads relative
dividend and labor income for outsiders to be more negatively
correlated in countries with weaker institutions. Consequently,
outsiders hold more domestic assets to hedge labor income risk. I
provide empirical evidence on this hedging demand. Concentrated
ownership arises because international diversification through the
sale of domestic assets by insiders is penalized by lower stock market

Date: February 2, 2012
Time: 03:00 P.M.

AMEX Conference Room (Second Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)


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