Purpose This paper aims to examine the dynamic nexus between corporate governance (CG) and firm performance in hybrid model countries. It also investigates the effect of horizontal agency conflicts on CG adherence. Design/methodology/approach This research uses vector autoregression methods and dynamic panels to examine the cross-sectional and longitudinal association between CG and performance, using three CG adherence indexes of transparency, management and board governance. The data set includes annual market and firm performance data from a sample of 93 companies trading in the Mexican stock market for the period 2010–2016. Findings This study finds evidence of dynamic interdependence between CG and firm performance, as well as weak effects of CG adherence on firms’ performance. The adverse effect of increasing return on equity and return on assets (ROE-ROA) gaps on CG adherence, which results from agency conflicts and insider ownership, is likely behind the weak association between CG and firm performance. Originality/value The findings in this study provide evidence that hybrid systems weaken the nexus between CG and firm performance. The propensity to prefer banking and bond debt to issuing stocks, as indicated by a greater ROE-ROA gap, points to favorable provisions for majority shareholders, adverse normative environments for minority shareholders and a low level of compliance with CG measures, among other problems.

Employment growth is a desirable outcome of Foreign Direct Investment (FDI) and the economic performance of regions. However, the evidence available for Mexico is inconclusive. This study aims to contribute to the literature by assessing the dynamic relation between FDI and employment in the states of Mexico, and investigating the conditioning role of social progress, local public investment and competitiveness. We employ Impulse Response Functions and variance decomposition, derived from a Panel Vector Autoregressive (PVAR) model. The results provide evidence on the nexus between employment growth and the different types of FDI. We confirm the dynamic interrelation is, at best, weak.

This study aims to examine whether decentralization causes regional economic growth for the states of Mexico in the period 1998–2016. We employ Granger causality tests and a Panel data Vector Autoregression model to account for the dynamics of fiscal federalism and endogeneity of federal transfers and economic growth. Impulse responses and variance decomposition are also employed to examine the time path of economic growth after unitary fiscal shocks from transfers. Among the results, we find federal transfers positively affect economic growth. The slim response of growth and its puzzling response to investment shocks possibly signal a soft budget problem.