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Legal form affects the performance of a company

Tadeusz Dudycz

European Journal of Law and Economics2025https://doi.org/10.1007/s10657-025-09852-0article
AJG 1ABDC C
Weight
0.37

What the paper says

Using the latent multidimensional approach, the paper examines the relationship between a company’s legal form and its performance. Based on 72,596 observations of companies operating in Poland, we show that the legal form has a strong relationship with the company’s efficiency. We reveal that the corporate form and limited liability, contrary to popular opinion, do not ensure the highest efficiency. They also do not stand out in terms of growth and risk. Entrepreneurship, direct involvement with the company, and the specific bond between partners are still key success factors. We also show that companies that are obliged to appoint governing bodies, favouring the separation of owners from management, are less efficient than those that do not have such an obligation. As a result, joint-stock companies, widely regarded as the pinnacle of the legal form, are characterized by lower efficiency than unlimited liability companies. We indicate that the reason is high agency costs, and this is confirmed by the cash ratio, used to approximate agency costs.

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https://doi.org/https://doi.org/10.1007/s10657-025-09852-0

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@article{tadeusz2025,
  title        = {{Legal form affects the performance of a company}},
  author       = {Tadeusz Dudycz},
  journal      = {European Journal of Law and Economics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1007/s10657-025-09852-0},
}

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Legal form affects the performance of a company

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.