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The Determinants of the German Corporate Governance Rating

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  • Drobetz, Wolfgang

    (University of Basel)

  • Gugler, Klaus
  • Hirschvogl, Simone

Abstract

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

Suggested Citation

  • Drobetz, Wolfgang & Gugler, Klaus & Hirschvogl, Simone, 2004. "The Determinants of the German Corporate Governance Rating," Working papers 2004/06, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2004/06
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    More about this item

    Keywords

    Corporate governance; endogeneity; ownership structure; board size; accounting principles; executive compensation.;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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