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The Determinants of the German Corporate Governance Rating

  • Wolfgang Drobetz
  • Klaus Gugler
  • Simone Hirschvogl

    (University of Basel)

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    This paper analyzes the determinants of the German corporate governance rating recently developed by Drobetz, Schillhofer, and Zimmermann (2004). We find a non- linear relationship between ownership concentration and the quality of firmlevel corporate governance as measured by the rating. Firms with larger boards of directors have lower governance ratings, but firms that apply US-GAAP or IAS rules and/or use an option-based remuneration plan have higher corporate governance ratings. Our results question the comply-or-explain principle embedded in recent corporate governance codes and call for a more rules-based approach in improving corporate governance in Europe.

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    File URL: http://wwz.unibas.ch/uploads/tx_x4epublication/the_determinants.pdf
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    Paper provided by Faculty of Business and Economics - University of Basel in its series Working papers with number 2004/06.

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    Date of creation: 2004
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    Handle: RePEc:bsl:wpaper:2004/06
    Contact details of provider: Postal: Peter-Merian-Weg 6, Postfach, CH-4002 Basel
    Web page: http://wwz.unibas.ch

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