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An interval variables approach to address measurement uncertainty in governance indicators

Author

Listed:
  • Carlo Drago

    (University of Rome "Niccolò Cusano" and NCI University in London)

  • Roberto Ricciuti

    (University of Verona and CESifo)

Abstract

Many variables in governance are measured with uncertainty. This paper addresses this problem, showing that interval variables are a suitable way to handle it, providing an application in corporate governance. We build two constructs, one for Investor protection and the other for Constraints on shareholders based on the original dataset by La Porta et al. (1998) and we find that for very low levels of investor protection, constraints are a suitable way to provide some form of safeguard. We also provide evidence for the theoretical claim that investor protection and constraints on shareholders work as substitutes under specific circumstances.

Suggested Citation

  • Carlo Drago & Roberto Ricciuti, 2019. "An interval variables approach to address measurement uncertainty in governance indicators," Economics Bulletin, AccessEcon, vol. 39(1), pages 626-635.
    • Handle: RePEc:ebl:ecbull:eb-18-00716
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    References listed on IDEAS

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    6. Selly Amal-Kerim & Hélène Rey-Valette & Francoise Seyte & Dorothé Boccanfuso, 2015. "A subjective view of governance indicators," Working Papers 15-10, LAMETA, Universtiy of Montpellier, revised Oct 2015.
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    Cited by:

    1. Carlo Drago & Andrea Gatto, 2022. "An interval‐valued composite indicator for energy efficiency and green entrepreneurship," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2107-2126, July.
    2. Drago, Carlo & Gatto, Andrea, 2023. "Gauging energy poverty in developing countries with a composite metric of electricity access," Utilities Policy, Elsevier, vol. 81(C).

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    More about this item

    Keywords

    Governance; Measurement; Interval Data; Latent Variables.;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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