One Size Does Not Fit All, After All: Evidence from Corporate Governance

Abstract:     
We identify well-governed companies by accounting for heterogeneity in their governance choices by using a unique dataset. We find that companies that depart from governance best practice because of genuine circumstances outperform all others and cannot be considered badly-governed. On the contrary, we find that mechanical adherence to best practice does not always lead to superior performance. We thus argue that flexibility in corporate governance regulation plays a crucial role, because companies are not homogenous entities.

Number of Pages in PDF File: 49

Keywords: Corporate Governance, Empirical Finance, Code of Best Practice, Flexible Regulation, UK

JEL Classification: G34, G38, K29

working papers series