The impact of higher quality government regulation of business and greater economic freedom on living standards. Evidence from OECD nations
| Published date | 11 April 2016 |
| Date | 11 April 2016 |
| DOI | https://doi.org/10.1108/JEPP-11-2015-0034 |
| Pages | 82-94 |
| Author | Richard Cebula,Fabrizio Rossi,Jeff Clark |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
The impact of higher quality
government regulation of
business and greater economic
freedom on living standards
Evidence from OECD nations
Richard Cebula
Department of Finance,
Accounting and Economics Jacksonville University, Jacksonville, Florida, USA
Fabrizio Rossi
University of Cassino and Southern Lazio, Cassino, Italy, and
Jeff Clark
The University of Tennessee at Chattanooga, Chattanooga, Tennessee, USA
Abstract
Purpose –The purpose of this paper is to evaluate whether two specific forms of government policy
influence entrepreneurship and hence the performance economy as a whole. Performance is measured
in terms of living standards and growth therein. The policies are, as follows: higher quality
government regulation of businesses and higher levels of economic freedom.
Design/methodology/approach –The paper first provides a basic model focussing upon the
regulation and economic freedom variables. The study then adds a dummy variable for G8 nations, a
tax burden variable, and the long-term interest rate and provides six estimates. The empirical analysis
involves pooled time-series/cross-section data for the OECD over the period 2003-2007.
Findings –The findings indicate that for OECD nations, higher quality public regulation promotes
entrepreneurial spirit and performance. Higher economic freedom does the same. The findings are that
higher quality government regulation of business and higher levels of economic freedom lead to higher
growth rates in the standard of living.
Originality/value –The time period studied, i.e., just prior to the Great Recession, the context of the
OECD, the adoption of pooled time-series/cross-section data, and the specific choice of variables in
the analysis, along with the estimation of possibly unique or close to unique specifications involving
the growth rate of living standards per se make this study different.
Keywords Entrepreneurial opportunity, Economic freedom, Regulatory policy
Paper type Research paper
1. Introduction
The complexity of corporate governance of publicly traded corporations through
boards of directors with respect to corporate performance and economic outcomes for
society has been studied extensively from a variety of perspectives (La Porta et al.,
1997, 2000, 2002; Morck et al., 1998, 2004; Shleifer and Wolfenzon, 2002; Renas and
Cebula, 2005; Ugur, 2009; Rossi and Cebula, 2015). The conventional wisdom argues
that good quality, transparent internal governance elevates corporate growth and
employment and contributes to greater economic growth and prosperity at the national
level (Yarrow, 1975; Renas and Cebula, 2005; Ugur, 2009). Of course, publicly traded
Journal of Entrepreneurship and
Public Policy
Vol. 5 No. 1, 2016
pp. 82-94
©Emerald Group Publishing Limited
2045-2101
DOI 10.1108/JEPP-11-2015-0034
Received 6 November 2015
Revised 12 January 2016
Accepted 13 January 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
JEL Classification —G30, G38, E02, E43, H22, H26
82
JEPP
5,1
To continue reading
Request your trial