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The Stock Market Reaction to the Introduction of Best Practices Codes by Spanish Firms

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  • Enrique Fernández‐Rodríguez
  • Silvia Gómez‐Ansón
  • Álvaro Cuervo‐García

Abstract

This paper analyses the market reaction to announcements made by Spanish firms of compliance with the code of best practice. It also attempts to determine how the characteristics of different firms may account for the excess returns observed. The results suggest that the market reacts positively to announcements of compliance with the code of best practice that imply a major restructuring of the board of directors, whereas no wealth effects are observed for announcements that relate to isolated recommendations in the code. These wealth effects are greater for lower levered firms, and also greater the higher the percentage of executive directors.

Suggested Citation

  • Enrique Fernández‐Rodríguez & Silvia Gómez‐Ansón & Álvaro Cuervo‐García, 2004. "The Stock Market Reaction to the Introduction of Best Practices Codes by Spanish Firms," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(1), pages 29-46, January.
    • Handle: RePEc:bla:corgov:v:12:y:2004:i:1:p:29-46
    DOI: 10.1111/j.1467-8683.2004.00341.x
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    References listed on IDEAS

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    1. Park, Yun W. & Shin, Hyun-Han, 2004. "Board composition and earnings management in Canada," Journal of Corporate Finance, Elsevier, vol. 10(3), pages 431-457, June.
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    Cited by:

    1. Rose, Caspar, 2016. "Firm performance and comply or explain disclosure in corporate governance," European Management Journal, Elsevier, vol. 34(3), pages 202-222.
    2. Björn Fasterling, 2012. "Development of Norms Through Compliance Disclosure," Journal of Business Ethics, Springer, vol. 106(1), pages 73-87, March.
    3. Torbjörn Tagesson & Sven-Olof Yrjö Collin, 2016. "Corporate governance influencing compliance with the Swedish Code of Corporate Governance," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 13(3), pages 262-277, August.
    4. Romilda Mazzotta & Giovanni Bronzetti & Graziella Sicoli & Paolo Tenuta, 2018. "La valutazione del CdA in contesti ad elevata concentrazione proprietaria: mero conformismo o reale strumento di valutazione?," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2018(2), pages 107-128.
    5. Nuria Reguera-Alvarado & Pilar Fuentes & Joaquina Laffarga, 2017. "Does Board Gender Diversity Influence Financial Performance? Evidence from Spain," Journal of Business Ethics, Springer, vol. 141(2), pages 337-350, March.
    6. John Nowland, 2008. "The Effect of National Governance Codes on Firm Disclosure Practices: Evidence from Analyst Earnings Forecasts," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(6), pages 475-491, November.
    7. Esther Del Brio & Elida Maia-Ramires & Alberto De Miguel, 2011. "Ownership structure and diversification in a scenario of weak shareholder protection," Applied Economics, Taylor & Francis Journals, vol. 43(29), pages 4537-4547.

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