I use firm-specific measures of openness to foreign investors to study the
impact of stock market liberalization on firm-level operating performance.
In a sample of over 1,100 firms from 28 countries, firms with stocks that
are open to foreign investors experience higher growth, greater investment,
greater profitability, greater efficiency, and lower leverage. Strategies to
address potential endogeneity suggest that the observed relation reflects,
at least in part, a causal effect of openness on operating performance.
So, openness and a market for managers does discipline firms, at least by comparison. But I bet average growth increases also come with an increase in variance.....
(Nod to KL, who would outsource the other gecko, too, and maybe even the cavemen.)