We study the impact of corporate governance frictions in an economy where growth is driven both by the foundation of new firms and by the in-house investment of incumbent firms. Firms' managers engage in tunneling and empire building activities. Active shareholders monitor managers, but can...

I study the growth and welfare e⁄ects of a business tax cut in two economies that di⁄er with respect to rms governance. In one the founders of the rms delegate management; in the other they do not. Growth is driven by the arrival of new rms, and by the accumulation of intangibles. Delegation...

Corporate governance distortions delay or even halt a country's transformation into a modern innovation economy. We investigate the mechanism through a growth model that allows for agency issues within firms. Governance distortions raise the cost of investment and depress the incentives to set...