Corporate Governance and Regulation: Can There Be Too Much of a Good Thing?

57 Pages Posted: 16 May 2008

See all articles by Valentina Bruno

Valentina Bruno

American University - Department of Finance and Real Estate

Stijn Claessens

Bank for International Settlements (BIS)

Multiple version iconThere are 3 versions of this paper

Date Written: February 2007

Abstract

For a large number of companies from different countries, we analyze how company corporate governance practices and country regulatory regimes interact in terms of company valuation. We confirm that corporate governance plays a crucial role in efficient company monitoring and shareholder protection, and consequently positively impacts valuation. We find substitution in valuation impact between corporate governance measures at the company and country level, with a possibility of over-regulation. Corporate governance appears also more valuable for companies that rely heavily on external financing, consistent with the hypothesis that corporate governance main role is to protect external financiers.

Keywords: Company valuation, corporate governance practices, regulatory regimes

JEL Classification: G34

Suggested Citation

Bruno, Valentina Giulia and Claessens, Stijn, Corporate Governance and Regulation: Can There Be Too Much of a Good Thing? (February 2007). CEPR Discussion Paper No. DP6108. Available at SSRN: https://ssrn.com/abstract=1133733

Valentina Giulia Bruno (Contact Author)

American University - Department of Finance and Real Estate ( email )

Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States

HOME PAGE: http://www.american.edu/kogod/faculty/bruno.cfm

Stijn Claessens

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

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