Competition law reform and firm performance: Evidence from developing countries

Authors

Incheol Kim, The University of Texas Rio Grande ValleyFollow
Suin Lee, The University of Texas Rio Grande Valley
Bina Sharma, Southern Utah University

Document Type

Article

Publication Date

9-2023

Abstract

We examine the effects of competition laws on firm performance in East Asian countries that have enacted antitrust legislation in the last three decades. Exploiting the staggered changes of these laws as quasi-exogenous shocks, we find that strengthened competition laws improve firm performance. Treated firms increase R&D investments and efficiency in inventory and asset management, while free cash flow decreases after reforms. Also, the effect of competition laws on firm performance is stronger with weaker corporate governance. Our findings indicate that government intervention promoting competitive market environments could benefit corporate owners in emerging markets where corporate governance is often substandard.

Comments

Original published version available at https://doi.org/10.1016/j.ememar.2023.101050

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Publication Title

Emerging Markets Review

DOI

10.1016/j.ememar.2023.101050

Recommended Citation

Kim, I., Lee, S. and Sharma, B., 2023. Competition law reform and firm performance: Evidence from developing countries. Emerging Markets Review, 56, p.101050. https://doi.org/10.1016/j.ememar.2023.101050