Gains and Losses of Adopting New Standards of Corporate Governance. A CGE Analysis For the Case of Argentina

CHISARI OMAR Y GUSTAVO FERRO

Corporate Governance and Development. Reform, Financial Systema and Legal Framework

Edward Elgar Publishers

Lugar: Londres; Año: 2009; p. 7 - 22

In this paper we use a Computable General Equilibrium model to estimate the costs of higher standards of corporate governance for Argentina in 2003. Estimated costs for the economy are in the range of 0.23/0.39 percent of GDP (per year). Therefore our simulations suggest that total costs and their impact on income distribution are relevant and may have been underestimated. We also estimate necessary reductions in cost of capital to compensate those additional expenses. Our perspective contributes to the discussion about the trade-offs of an emerging economy that wishes to improve its access to capital markets, but faces chronic scarcity of human capital, increasing costs in the industry that provides auditing services, and income distribution problems.