Cleaning Corporate Governance

76 Pages Posted: 3 Mar 2021 Last revised: 6 Feb 2022

See all articles by Jens Frankenreiter

Jens Frankenreiter

Washington University in St. Louis - School of Law

Cathy Hwang

University of Virginia School of Law

Yaron Nili

University of Wisconsin Law School

Eric L. Talley

Columbia University - School of Law; European Corporate Governance Institute (ECGI)

Date Written: February 11, 2021


Although empirical scholarship dominates the field of law and finance, much of it shares a common vulnerability: an abiding faith in the accuracy and integrity of a small, specialized collection of corporate governance data. In this paper, we unveil a novel collection of three decades’ worth of corporate charters for thousands of public companies, which shows that this faith is misplaced.

We make three principal contributions to the literature. First, we label our corpus for a variety of firm- and state-level governance features. Doing so reveals significant infirmities within the most well-known corporate governance datasets, including an error rate exceeding eighty percent in the G-Index, the most widely used proxy for “good governance” in law and finance. Correcting these errors substantially weakens one of the most well-known results in law and finance, which associates good governance with higher investment returns. Second, we make our corpus freely available to others, in hope of providing a long-overdue resource for traditional scholars as well as those exploring new frontiers in corporate governance, ranging from machine learning to stakeholder governance to the effects of common ownership. Third, and more broadly, our analysis exposes twin cautionary tales about the critical role of lawyers in empirical research, and the dubious practice of throttling public access to public records.

Keywords: Corporate Governance; G-Index; Corporate Law; Corporate Finance

JEL Classification: G3, K22

Suggested Citation

Frankenreiter, Jens and Hwang, Cathy and Nili, Yaron and Talley, Eric L., Cleaning Corporate Governance (February 11, 2021). 170 University of Pennsylvania Law Review 1 (2021), Virginia Law and Economics Research Paper No. 2021-05, Virginia Public Law and Legal Theory Research Paper No. 2021-16, Columbia Law and Economics Working Paper No.644, Univ. of Wisconsin Legal Studies Research Paper No. 1690, European Corporate Governance Institute – Finance Working Paper No. 738/2021, Available at SSRN:

Jens Frankenreiter

Washington University in St. Louis - School of Law ( email )

Campus Box 1120
St. Louis, MO 63130
United States

Cathy Hwang

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

Yaron Nili

University of Wisconsin Law School ( email )

975 Bascom Mall
Madison, WI 53706
United States

Eric L. Talley (Contact Author)

Columbia University - School of Law ( email )

435 West 116th Street
New York, NY 10025
United States


European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics