The (Ir)relevance of Disclosure of Compliance with Corporate Governance Codes - Evidence from the German Stock Market
This paper studies the short- and long-run announcement effects of declaring compliance with the German Corporate Governance Code (‘the Code’). We examine a unique, hand-collected data set of 317 German listed firms from 2002-2005. First, we present evidence from an analysis of firms’ compliance behaviour regarding the Code. Second, event study results suggest that firm value is unaffected by such announcements, although there was widespread assumption by the Code’s regulator and promoters that shortterm market reactions would follow first-time disclosure of the declaration of conformity. For the long term, we find that neither higher levels of Code compliance nor improvements in governance quality have a (positive) impact on stock price performance compared to low levels of compliance and a reduction in the level of compliance. Our results add further evidence to the hypothesis that self-regulatory corporate governance reform initiatives relying on mandatory disclosure without independent monitoring and legal enforcement are ineffective and do not positively influence shareholder value.
|Date of creation:||Jun 2004|
|Date of revision:||Apr 2006|
|Contact details of provider:|| Web page: http://www.SwissFinanceInstitute.ch|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:chf:rpseri:rp0611. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marilyn Barja)
If references are entirely missing, you can add them using this form.