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

49 Pages Posted: 3 Mar 2006

See all articles by Sridhar Arcot

Sridhar Arcot

ESSEC Business School - Finance Department

Valentina Bruno

American University - Department of Finance and Real Estate

Date Written: January 15, 2007

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.

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

JEL Classification: G34, G38, K29

Suggested Citation

Arcot, Sridhar and Bruno, Valentina Giulia, One Size Does Not Fit All, After All: Evidence from Corporate Governance (January 15, 2007). 1st Annual Conference on Empirical Legal Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=887947 or http://dx.doi.org/10.2139/ssrn.887947

Sridhar Arcot (Contact Author)

ESSEC Business School - Finance Department ( email )

Avenue Bernard Hirsch
BP 105 Cergy Cedex, 95021
France

Valentina Giulia Bruno

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

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