Abstract

http://ssrn.com/abstract=2219525
 
 

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Methods for Multicountry Studies of Corporate Governance (and Evidence from the BRIKT Countries)


Bernard S. Black


Northwestern University - School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

Antonio Gledson De Carvalho


Fundacao Getulio Vargas School of Business at Sao Paulo

Vikramaditya S. Khanna


University of Michigan Law School

Woochan Kim


Korea University Business School; European Corporate Governance Institute (ECGI); Asia Corporate Governance Institute (AICG)

B. Burcin Yurtoglu


WHU - Otto Beisheim School of Management

March 1, 2013

European Corporate Governance Institute (ECGI) - Finance Working Paper No. 414/2014
Northwestern Law & Econ Research Paper No. 13-05
26th Australasian Finance and Banking Conference 2013
U of Michigan Law & Econ Research Paper No. 13-005

Abstract:     
We discuss the perils in multicountry studies of corporate governance (CG), focusing on emerging markets. The existing studies are massively multicountry studies, which cover many firms across many countries, but rely on the same limited governance elements in each countries, have few firm-level control variables, and use pure-cross-sectional data. This paper discusses the severe data and construct validity issues in these studies, proposes methods to respond to those issues, and applies those methods through a study of five major emerging markets (Brazil, India, Korea, Russia, and Turkey). We develop unique time-series datasets on governance in each country. We address construct validity by building country-specific indices which reflect local norms and institutions. These similar-but-not-identical indices predict higher firm market value, both in each country and when pooled across countries. In contrast, a “common index” that uses the same elements in each country, has no predictive power. Firm fixed effects results differ substantially from cross-sectional or pooled OLS, and firm random effects. Results are also sensitive to choice of control variables (strongly so with the weaker cross-sectional and pooled OLS specifications), and to the functional form for the dependent variable and how one addresses outliers.

An expanded working paper version of this paper is available at http://ssrn.com/abstract=23591265, contains details on our governance indices and the five countries we study, and additional results, which were omitted from this paper for space reasons.

Number of Pages in PDF File: 33

Keywords: Brazil, Korea, India, Russia, Turkey, corporate governance, boards of directors, disclosure, shareholder rights

JEL Classification: G18, G30, G34, G39, K22, K29

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Date posted: March 23, 2013 ; Last revised: March 20, 2014

Suggested Citation

Black, Bernard S. and De Carvalho, Antonio Gledson and Khanna, Vikramaditya S. and Kim, Woochan and Yurtoglu, B. Burcin, Methods for Multicountry Studies of Corporate Governance (and Evidence from the BRIKT Countries) (March 1, 2013). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 414/2014 ; Northwestern Law & Econ Research Paper No. 13-05; 26th Australasian Finance and Banking Conference 2013; U of Michigan Law & Econ Research Paper No. 13-005. Available at SSRN: http://ssrn.com/abstract=2219525 or http://dx.doi.org/10.2139/ssrn.2219525

Contact Information

Bernard S. Black (Contact Author)
Northwestern University - School of Law ( email )
375 E. Chicago Ave
Unit 1505
Chicago, IL 60611
United States
512-503-2784 (Phone)

Northwestern University - Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)
European Corporate Governance Institute (ECGI)
Brussels
Belgium
Antonio Gledson De Carvalho
Fundacao Getulio Vargas School of Business at Sao Paulo ( email )
R. Itapeva, 474 - 7o. andar
Sao Paulo 01313-902
Brazil
+5511 3281-7767 (Phone)
Vikramaditya S. Khanna
University of Michigan Law School ( email )
625 South State Street
Ann Arbor, MI 48109-1215
United States
734-615-6959 (Phone)
Woochan Kim
Korea University Business School ( email )
LG-POSCO Bldg #524
Anam-Dong, Seongbuk-Ku
Seoul, Seoul 136701
Korea
+822-3290-2816 (Phone)
+822-922-7220 (Fax)
HOME PAGE: http://biz.korea.ac.kr/professor/wckim
European Corporate Governance Institute (ECGI) ( email )
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Asia Corporate Governance Institute (AICG) ( email )
1, 5-ga, Anam-dong
Sungbuk-gu
Seoul, 136-701
Korea, Republic of (South Korea)
B. Burcin Yurtoglu
WHU - Otto Beisheim School of Management ( email )
Chair of Corporate Finance
Burgplatz 2
Vallendar, 56179
Germany
+49 261 6509-721 (Phone)
+49 261 6509-729 (Fax)
HOME PAGE: http://www.whu.edu/forschung/fakultaet/finance-group/corporate-finance/
Feedback to SSRN


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