Journal of Financial Intermediation Vol. 19 No. 4 2010
Corporate governance and regulation: Can there be too much of a good thing?
Abstract
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.
- DOI
- 10.1016/j.jfi.2009.10.001
- Volume
- 19
- Issue
- 4
- Pages
- 461-482
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref