How corporate governance affects productivity in civil-law business environments: Evidence from Latin America

Abstract We examine the relationship between corporate governance and productivity in nonfinancial publicly traded firms based in Latin America. Using a sample of 670 firm-year observations from 2006 to 2014, we find that board size, gender diversity, institutional ownership, and the presence of independent directors affect firms' productivity. We find a statistically significant nonlinear relationship between board size and productivity. Institutional ownership increases productivity, while board independence decreases it. However, when the country's business friendliness and institutional ownership are controlled, the relationship between board independence and productivity turns positive and statistically significant. Finally, a higher proportion of female directors decreases productivity.