Firm Growth around the World: Financial Constraints, Corruption, and Privatization

This Dissertation consists of three separate essays that are broadly related to firm-level financial constraints, corruption, and privatization and their relation to firm performance and growth across the globe. I employ World Bank Enterprise Survey data collected from 2006-2011 for over one hundred countries. In my first Dissertation essay, I study the effects of accounting information disclosure through auditing on firm level financial constraints and corruption obstacles. I find that audited firms exhibit significantly lower level of financial constraints than unaudited firms. Audited firms also encounter higher level of corruption obstacles than unaudited firms. The second essay examines three firm-level constraints to firm growth (financing, corruption and legal) of privatized firms in comparison to those of the originally private (de novo) firms. I find that the de novo firms experience significantly higher financial, corruption, and legal obstacles than the privatized firms. I further find that the privatized firms significantly underperform the de novo firms. In addition, I find ownership concentration and foreign ownership have an overall moderating effect on firm-level growth constraints. My final essay examines the effect of International Organization for Standardization (ISO) certification on firm performance measured by sales growth and labor productivity. I find that ISO-certified firms exhibit higher sales growth and higher labor productivity than non-certified firms. I also find that the positive link between ISO certification and labor productivity remains highly significant regardless the corruption levels. However, when firms operate in a highly corrupt business environment, the positive effect of ISO certification on sales growth becomes insignificant