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Corporate governance and regulation: can there be too much of a good thing?

Listed author(s):
  • Valentina G. Bruno
  • Stijn Claessens

For a large number of companies from different countries, we analyze how company corporate governance practices and country regulatory regimes interact in terms of company valuation. We confirm that corporate governance plays a crucial role in efficient company monitoring and shareholder protection, and consequently positively impacts valuation. We find substitution in valuation impact between corporate governance measures at the company and country level, with a possibility of over-regulation. Corporate governance appears also more valuable for companies that rely heavily on external financing, consistent with the hypothesis that corporate governance main role is to protect external financiers.

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File URL: http://eprints.lse.ac.uk/24633/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 24633.

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Length: 55 pages
Date of creation: Oct 2006
Handle: RePEc:ehl:lserod:24633
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