Description: Business Environment and the Incorporation Decision

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Business Environment and the Incorporation Decision

Using firm-level data from 52 countries, the authors investigate how a country's institutions and business environment affect firms' organizational choices and the effects of organizational form on access to finance and growth. They find...

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Bibliographic Details
Main Authors:	Demirguc-Kunt, Asli, Love, Inessa, Maksimovic, Vojislav
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	ACTIONS ADVERSE SELECTION AGRICULTURE BANKRUPTCY BUSINESS ENVIRONMENT CHARTER CIVIL LAW COMMON LAW COMPARATIVE ADVANTAGE COMPETITORS CORPORATE OWNERSHIP CORPORATION CORPORATIONS CORRUPTION DAMAGES DEBT DIVIDENDS ECONOMIC DEVELOPMENT ENTREPRENEURS EQUALITY FINANCIAL INSTITUTIONS FIRM SIZE FIRMS FOREIGN PARTNERS GDP GDP PER CAPITA GOVERNMENT REGULATIONS GROWTH RATE INCOME INCOME TAXES INEFFICIENCY JOINT STOCK COMPANIES LAWS LAWYERS LEGAL DEVELOPMENT LEGAL FORMS LEGAL FRAMEWORK LEGAL STATUS LEGAL SYSTEMS MEDIUM ENTERPRISES ORGANIZATIONAL FORM ORGANIZATIONAL STRUCTURE PER CAPITA INCOME PROPERTY RIGHTS PROPRIETORSHIP REGULATORY BURDENS SHAREHOLDERS SMALL BUSINESSES SMALL FIRMS SOLE PROPRIETORSHIPS TAXATION TRANSACTIONS COSTS TRUSTS WEALTH BANKING REGULATIONS BANKRUPTCY PROCEDURES CORPORATE FINANCE CORPORATE GOVERNANCE CORPORATE TAX RATE EXTERNAL FINANCING FINANCE RESEARCH FINANCIAL DEVELOPMENT FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEM FOREIGN OWNERSHIP INDUSTRIAL ECONOMICS INFLATION INVESTMENT FUNDS INVESTOR PROTECTION LIMITATION OF LIABILITY POLITICAL ECONOMY SECURITIES STOCK COMPANIES TAX SYSTEM
Online Access:	http://documents.worldbank.org/curated/en/2004/05/4973387/business-environment-incorporation-decision http://hdl.handle.net/10986/14021

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Summary:	Using firm-level data from 52 countries, the authors investigate how a country's institutions and business environment affect firms' organizational choices and the effects of organizational form on access to finance and growth. They find that businesses are more likely to choose the corporate form in countries with developed financial sectors and efficient legal systems, strong shareholder and creditor rights, low regulatory burdens and corporate taxes, and efficient bankruptcy processes. Corporations report fewer financing, legal, and regulatory obstacles than unincorporated firms, and this advantage is greater in countries with more developed institutions and favorable business environments. The authors find some evidence of higher growth of incorporated businesses in countries with good financial and legal institutions.