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Corporate Governance and Regulation: Can There Be Too Much of a Good Thing?


  • Stijn Claessen
  • Valentina Bruno



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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  • Stijn Claessen & Valentina Bruno, 2006. "Corporate Governance and Regulation: Can There Be Too Much of a Good Thing?," FMG Discussion Papers dp574, Financial Markets Group.
  • Handle: RePEc:fmg:fmgdps:dp574

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    Cited by:

    1. Greene, William H. & Hornstein, Abigail S. & White, Lawrence J., 2009. "Multinationals do it better: Evidence on the efficiency of corporations' capital budgeting," Journal of Empirical Finance, Elsevier, vol. 16(5), pages 703-720, December.
    2. Chhaochharia, Vidhi & Laeven, Luc, 2007. "The Invisible Hand in Corporate Governance," CEPR Discussion Papers 6256, C.E.P.R. Discussion Papers.

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