Voluntary Adoption of Corporate Governance Mechanisms
AbstractWe model firms' incentives to voluntarily adopt corporate governance mechanisms and hypothesize that management's ability to extract private benefits, the need for external funds, and the ease with which a firm's assets may be monitored are important determinants of the level of governance. Using hand-collected data, we test these hypotheses and examine firms' propensity to adopt recommended but not required governance standards from their home and neighboring country's jurisdictions. We document that a significant level of voluntary adoption occurs and that this level has been both increasing over time and declining in variability across firms. Governance mechanisms are least likely to be voluntarily implemented when management controls a significant portion of common stock votes or a majority owner exists. In contrast, voluntary adoption increases when the firm faces significant investment opportunities and employs large levels of expenditures which are difficult to monitor such as research and development expenses.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1112.
Length: 38 pages
Date of creation: Nov 2006
Date of revision:
Corporate Governance; Empirial Finance;
Find related papers by JEL classification:
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-14 (All new papers)
- NEP-BEC-2007-01-14 (Business Economics)
- NEP-CFN-2007-01-14 (Corporate Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Craig Doidge & G. Andrew Karolyi & Rene M. Stulz, 2001.
"Why are Foreign Firms Listed in the U.S. Worth More?,"
NBER Working Papers
8538, National Bureau of Economic Research, Inc.
- Doidge, Craig & Karolyi, G. Andrew & Stulz, Rene M., 2004. "Why are foreign firms listed in the U.S. worth more?," Journal of Financial Economics, Elsevier, vol. 71(2), pages 205-238, February.
- John Y. Campbell, 1993.
"Understanding Risk and Return,"
NBER Working Papers
4554, National Bureau of Economic Research, Inc.
- John Y. Campbell, 1995. "Understanding Risk and Return," Harvard Institute of Economic Research Working Papers 1711, Harvard - Institute of Economic Research.
- Campbell, John, 1996. "Understanding Risk and Return," Scholarly Articles 3153293, Harvard University Department of Economics.
- Alexander Dyck & Luigi Zingales, 2002.
"Private Benefits of Control: An International Comparison,"
NBER Working Papers
8711, National Bureau of Economic Research, Inc.
- Alexander Dyck & Luigi Zingales, 2004. "Private Benefits of Control: An International Comparison," Journal of Finance, American Finance Association, vol. 59(2), pages 537-600, 04.
- Dyck, Alexander & Zingales, Luigi, 2002. "Private Benefits of Control: An International Comparison," CEPR Discussion Papers 3177, C.E.P.R. Discussion Papers.
- Paul Gompers & Joy Ishii & Andrew Metrick, 2003.
"Corporate Governance And Equity Prices,"
The Quarterly Journal of Economics,
MIT Press, vol. 118(1), pages 107-155, February.
- Paul A. Gompers & Joy L. Ishii & Andrew Metrick, 2001. "Corporate Governance and Equity Prices," NBER Working Papers 8449, National Bureau of Economic Research, Inc.
- Paul A. Gompers & Joy L. Ishii & Andrew Metrick, 2002. "Corporate Governance and Equity Prices," Center for Financial Institutions Working Papers 02-32, Wharton School Center for Financial Institutions, University of Pennsylvania.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998.
"Law and Finance,"
3451310, Harvard University Department of Economics.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," Harvard Institute of Economic Research Working Papers 1768, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
- Erik Berglof & Ernst-Ludwig von Thadden, 1999.
"The Changing Corporate Governance Paradigm: Implications for Transition and Developing Countries,"
William Davidson Institute Working Papers Series
263, William Davidson Institute at the University of Michigan.
- Erik BERGLÖF & Ernst-Ludwig VON THADDEN, 1999. "The Changing Corporate Governance Paradigm : Implications for Transition and Developing Countries," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 9912, Université de Lausanne, Faculté des HEC, DEEP.
- Randall Morck & Michael Percy & Gloria Tian & Bernard Yeung, 2005.
"The Rise and Fall of the Widely Held Firm: A History of Corporate Ownership in Canada,"
in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 65-148
National Bureau of Economic Research, Inc.
- Randall Morck & Michael Percy & Gloria Tian & Bernard Yeung, 2004. "The Rise and Fall of the Widely Held Firm - A History of Corporate Ownership in Canada," NBER Working Papers 10635, National Bureau of Economic Research, Inc.
- Tirole, Jean, 1999.
CEPR Discussion Papers
2086, C.E.P.R. Discussion Papers.
- Durnev, Art & Fauver, Larry, 2008. "Stealing from Thieves: Firm Governance and Performance when States are Predatory," CEI Working Paper Series 2008-12, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
- Barbara, Petracci, 2011. "Trading when you cannot trade: Blackout periods in Italian firms," International Review of Law and Economics, Elsevier, vol. 31(3), pages 196-204, September.
- Morgan, Angela & Wolf, Jack, 2007. "Approval of shareholder-sponsored proposals: Evidence from Canada," International Review of Financial Analysis, Elsevier, vol. 16(2), pages 136-151.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock).
If references are entirely missing, you can add them using this form.