Dictators make lousy managers

Brad DeLong's blog alerted me to this study of corporate governance which I hadn't been aware of. The conclusion is interesting:

A 2003 Harvard University/Wharton School paper entitled "Corporate Governance and Equity Prices" ranked 1,500 companies in terms of management power, sorting firms into a Democracy Portfolio (firms in which shareholder rights were strongest) and a Dictatorship Portfolio (firms in which managers were subject to less oversight). Shockingly--or not--the democratic firms outperformed the dictatorship firms by 8.5 percentage points per year throughout the 1990s. If you believe that's a good thing, then stronger corporate governance doesn't just make things "nicer" or "fairer" and stick it to "greedy" CEOs--it actually makes better economic sense in many cases.

Dubya has certainly proven that dictatorships don't run governments very well. I guess the same can be said for corporations too.