Corporate governance and regulation: Can there be too much of a good thing?
We investigate how company-level corporate governance practices and country-level legal investor protection jointly affect company performance. We find that in any legal regime there are a few specific governance practices that improve performance. Companies with good governance practices operating in stringent legal environments, however, show a valuation discount relative to similar companies operating in flexible legal environments. At the same time, a stronger country-level regime does not reduce the valuation discount of companies with weak governance practices. Our analysis suggests a threshold level of country development above which stringent regulation hurts the performance of well governed companies or has a neutral effect for poorly governed companies.
Year of publication: |
2010
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Authors: | Bruno, Valentina ; Claessens, Stijn |
Published in: |
Journal of Financial Intermediation. - Elsevier, ISSN 1042-9573. - Vol. 19.2010, 4, p. 461-482
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Publisher: |
Elsevier |
Keywords: | Corporate governance Country regulation Company valuation Cost of capital |
Saved in:
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