Honestly, there is no relationship.  People with"effective" control divert profits to themselves.  There is a huge principle-Agent problem here.

The whole LLSV Law and Finance strain of finance literature would tell you that country-level corporate governance is good for many things. Their 2002 JF paper finds higher firm valuations in countries with better CG, on a sample of wealthy economies. There are M&A papers (including one of my own) that find that better governance leads to higher M&A premiums, at least in post-dot-com-bubble and all-cash samples. Globerman and Shapiro (2003) find a direct link between US FDI and corporate governance.. Better corporate governance is connected to corruption. So if better CG leads to more investments, and if lower corruption leads to less misappropriation, from that investment, then there should be a link.

Dear Nimrod Zalk

Greetings,

Please see the attached file about your topic may be show the relationship.

Best Regards 

This may go in a slightly different direction.  The Kansas Leadership Center has some interesting ideas and resources like one might expect from an independent non-profit. One of the key leadership principles is that leadership is an activity.  It is NOT a position.  

Authority is necessary for organization for protection, direction, and control.  Perhaps corporate governance has well defined authority.  Fixed capital formation, like Mohamad suggested above, is likely influenced by other factors (e.g., interest rates, expectations, culture, and many others.  

www.kansasleadershipcenter.org

Corporate governance  and capital formation does not have direct relationship. But good corporate governance can contribute to capital formation by contributing transparency, equity, justice to shareholder and board of directors action. Shareholders justice and profit plaughing helps can be transparent. Thus govarnance and capital formation connected.   

 Many thanks for these various contributions.

Dear Nimrod,

To my understanding, there are features in what you describe as "good corporate governance" that can be applied in fixed capital formation to the benefit of those concerned. In the first place, I think about trasparency, management control, internal controls, democratic decision making and so on. Therefore, please name your reasons why there could be an inverse relationship between "improved corporate governance" and fixed capital formation.

Paul