Influence of Corporate Governance on Product Market Competition Discussion

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Write an essay of the influence or function of corporate governance on product market competition. You can start by looking at earlier papers which are cited by the article or later papers that cite the article. For the latter group, the use of Google Scholar might be helpful. As a broad guideline, you should aim to identify six or seven additional articles to the topic. The essay should between 850-900 words (excluding the references),not exceed 900 words! READING LIST OF REQUIRED ADDITIONAL ARTICLES The individual units on Moodle specify also corresponding chapters of the main textbook (Jonathan Berk and Peter DeMarzo: Corporate Finance, 2020, 5th edition) as well as other supplementary articles and materials • Eliezer Fich and Anil Shivdasani (2006): Are Busy Boards Effective Monitors?, Journal of Finance, Vol. 61(2) • Michael Jensen and Kevin Murphy (1990): Performance Pay and Top-Management Incentives, Journal of Political Economy, Vol. 98(2) • Vicente Cunat, Mireia Gine and Maria Guadalupe (2012): The Vote Is Cast: The Effect of Corporate Governance on Shareholder Value, Journal of Finance, Vol. 67(5) • Ronald Masulis, Cong Wang and Fei Xie: Corporate Governance and Acquirer Returns (2007): Corporate Governance and Acquirer Returns, Journal of Finance, Vol. 62(4) • Paul Gompers, Joy Ishii, and Andrew Metrick (2003): Corporate Governance and Equity Prices, Quarterly Journal of Economics, Vol. 118(1) • Rafael La Porta, Florencio Lopez-De-Silanes, Andrei Shleifer, and Robert W. Vishny (1997): Legal Determinants of External Finance, Journal of Finance, Vol. 52(3), pp. 1131-1150 • Rafael La Porta, Florencio Lopez‐de‐Silanes, Andrei Shleifer and Robert W. Vishny (1998): Law and Finance, Journal of Political Economy, Vol. 106(6), pp. 1113-1155 • Rafael La Porta, Florencio Lopez-De-Silanes, and Andrei Shleifer (1999): Corporate Ownership Around the World, Journal of Finance, Vol. 54(2), pp. 471-517 • Julian Franks, Colin Mayer, and Stefano Rossi (2009): Ownership: Evolution and Regulation, Review of Financial Studies, Vol. 22(10), pp. 4009-4056 • Jay Ritter and Ivo Welch (2002): A Review of IPO Activity, Pricing, and Allocations, Journal of Finance, Vol. 57(4), pp. 1795-1828. • Michael Jensen (1986): Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers, American Economic Review, Vol. 76(2), pp. 323-329. • Amit Seru (2014): Firm boundaries matter: Evidence from conglomerates and R&D activity, Journal of Financial Economics, Vol. 111, pp. 381-405 • Jakob de Haan, Yi Fang, and Zhongbo Jing (2020): Does the risk on banks’ balance sheets predict banking crises? New evidence for developing countries, International Review of Economics and Finance, Vol. 68, pp. 254–268 • John Graham and Campbell Harvey (2002): How Do CFOs Make Capital Budgeting and Capital Structure Decisions? Journal of Applied Corporate Finance, Vol. 15.1, pp. 8-23. • Raghuram G. Rajan and Luigi Zingales (1995): What Do We Know about Capital Structure? Some Evidence from International Data, Journal of Finance, Vol. 50, No. 5, pp. 1421-1460.
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Influence of Corporate Governance on Product Market Competition





Influence of Corporate Governance on Product Market Competition
Corporate governance refers to mechanisms and processes that are applied in the
operation of a corporate. All stakeholders of a corporate are essential in its management. For
instance, the management is responsible for ensuring that an organization attains its strategic
aims. Employees are involved in different business activities to enhance an organization's
profitability (Cuñat, Gine, & Guadalupe, 2012). Product market competition is viewed as a
disciplinary mechanism that influences how activities are monitored. Understanding the
influence of corporate governance on product market competition is essential as it helps
managers to develop reliable strategies for their organizations (Januszewski, Köke, & Winter,
2002). The paper focuses on both positive and negative influences of corporate governance on
product market competition.
Positive Influence
It is viewed that corporate governance helps an organization to meet the best interests of
different stakeholders. This feature increases investors' confidence in a firm. As a result,
organizations can increase their capital. Organizations are therefore made to develop a variety of
products, thus resulting in increased competition towards other organizations in the market.
Moreover, the practice offers the management suitable advice on how to meet its goals and
objectives (Cuñat, Gine, & Guadalupe, 2012). For example, it makes an organization improve its
pricing strategy. This increases a firm's capability of increasing competition in the market. It is
also observed that rational management makes organizations increase their productivity and



innovativeness. This results in other organizations increasing their creativity and production.
This aspect leads to increased market competition in the market (Amba, 2014).
Effective corporate governance also helps an organization to identify the right consumers
for their products. This is done through suitable marketing research activities. By attaining the
right customers for its products, an organization can increase competition in the market.
Therefore, if other organizations want to survive in the market, they will need to determine the
perfect customers for their own products (Cuñat, ...

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