The separation of ownership and control and investment decisions in Mexican manufacturing firms

Abstract

We study how the ownership and control structures may explain investment decisions of Mexican manufacturing firms. We use measures of ownership, management and agency costs. The econometric analysis uses census data for 182 industries. Our findings support the claim that agency costs, as a measure of the separation of management and control, and firms` size can explain investment decisions. Furthermore the estimators support the necessity to include investment opportunities and cash flow as control variables. The coefficients of such variables are mostly significant and positive.

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