Investment spending and corporate governance: Evidence from the ASE listed firms

Purpose - The purpose of this paper is to present evidence on the effects that different ownership's structures of Greek listed firms exercise on the relation between investment and liquidity constraints. Design/methodology/approach - Corporate governance in Greece is primarily based on the form of family-owned firms, as in many European countries. In countries with similar corporate governance systems, a possible source of separation (in the absence of bank-controlled firms and large business groups) between management and ownership is the nationality of the companies, as foreign nationality implies the physical separation of managers and owners. A second possible separation is based on the shareholdings of the CEO when he/she bears no relation with the controlling shareholders. A sample of Athens Stock Exchange listed firms is collected and a generalized (vs a simple) model of investment is applied to test the role of corporate governance using these two basic separations of management and ownership. Findings - The paper's empirical findings support the hypothesis of asymmetric information both in the total sample and in various sub-samples. Low Originality/value - This paper links information-related problems of investment with simple corporate governance structures.