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Diffusion of Regulatory Innovations: The Case of Corporate Governance Codes

Journal of Institutional Economics, Forthcoming

46 Pages Posted: 13 Feb 2014 Last revised: 20 Nov 2016

Carsten Gerner-Beuerle

University College London - Faculty of Laws

Multiple version iconThere are 2 versions of this paper

Date Written: October 26, 2016

Abstract

Since the 1990s, most European countries have adopted detailed corporate governance codes regulating listed companies. Even though the initial codes were designed against the backdrop of a particular jurisdiction, best practice standards have become remarkably similar across legal traditions. This raises the question whether the codes are sufficiently responsive to local conditions, or standard setters are mainly motivated by the concern not to fall behind internationally accepted benchmark standards. The article quantifies central corporate governance provisions and maps their international diffusion. Controlling for differences in legal families and ownership structure, the article shows that the diffusion of best practice standards leads to a statistically significant increase in the likelihood that a foreign standard setter will adopt a broadly similar provision. The findings indicate that codes are often seen as signalling devices, irrespective of whether or not the adopted standards are well aligned with the domestic economic and legal environment.

The Appendices for this paper are available at the following URL: http://ssrn.com/abstract=2521100

Keywords: corporate governance codes, board structure regulation, diffusion, empirical legal research

JEL Classification: G34, G38, K22, P51

Suggested Citation

Gerner-Beuerle, Carsten, Diffusion of Regulatory Innovations: The Case of Corporate Governance Codes (October 26, 2016). Journal of Institutional Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2346673 or http://dx.doi.org/10.2139/ssrn.2346673

Carsten Gerner-Beuerle (Contact Author)

University College London - Faculty of Laws ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

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