IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-00786664.html
   My bibliography  Save this paper

Corporate governance, value and performance of firms: New empirical results on convergence from a large international database

Author

Listed:
  • Jackie Krafft

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Yiping Qu

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Francesco Quatraro

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Jacques-Laurent Ravix

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

Abstract

This paper aims to revisit the link between corporate governance, value, and firm performance by focusing on convergence, understood as the way that non-US firms are adopting US best practice in terms of corporate governance, and the implications of this adoption. We examine theoretical questions related to conventional models (agency theory, transaction cost economics, new property rights theory),which tend to suggest rational adoption of best practice, and contributions that alternatively consider country- and firm-level differences as possible barriers to convergence. We contribute to the empirical literature by using a large international database to show how non-US firms' adoption of US best practice is having an impact on performance.

Suggested Citation

  • Jackie Krafft & Yiping Qu & Francesco Quatraro & Jacques-Laurent Ravix, 2014. "Corporate governance, value and performance of firms: New empirical results on convergence from a large international database," Post-Print hal-00786664, HAL.
    • Handle: RePEc:hal:journl:hal-00786664
    DOI: 10.1093/icc/dtt007
    Note: View the original document on HAL open archive server: https://hal.science/hal-00786664
    as

    Download full text from publisher

    File URL: https://hal.science/hal-00786664/document
    Download Restriction: no
    File URL: https://libkey.io/10.1093/icc/dtt007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Williamson, Oliver E, 1988. " Corporate Finance and Corporate Governance," Journal of Finance, American Finance Association, vol. 43(3), pages 567-591, July.
    2. Michel Aglietta & Antoine Rebérioux, 2005. "Corporate Governance Adrift," Books, Edward Elgar Publishing, number 3675.
    3. Klapper, Leora F. & Love, Inessa, 2004. "Corporate governance, investor protection, and performance in emerging markets," Journal of Corporate Finance, Elsevier, vol. 10(5), pages 703-728, November.
    4. Lucian A. Bebchuk & Michael S. Weisbach, 2012. "The State of Corporate Governance Research," Springer Books, in: Sabri Boubaker & Bang Dang Nguyen & Duc Khuong Nguyen (ed.), Corporate Governance, edition 127, pages 325-346, Springer.
    5. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    6. Reena Aggarwal & Isil Erel & René Stulz & Rohan Williamson, 2010. "Differences in Governance Practices between U.S. and Foreign Firms: Measurement, Causes, and Consequences," The Review of Financial Studies, Society for Financial Studies, vol. 23(3), pages 3131-3169, March.
    7. John C. Coffee, 2005. "A Theory of Corporate Scandals: Why the USA and Europe Differ," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(2), pages 198-211, Summer.
    8. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    9. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    10. Martynova, Marina & Renneboog, Luc, 2011. "Evidence on the international evolution and convergence of corporate governance regulations," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1531-1557.
    11. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
    12. Denis, Diane K. & McConnell, John J., 2003. "International Corporate Governance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(1), pages 1-36, March.
    13. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer & Robert Vishny, 2002. "Investor Protection and Corporate Valuation," Journal of Finance, American Finance Association, vol. 57(3), pages 1147-1170, June.
    14. John E. Core & Wayne R. Guay & Tjomme O. Rusticus, 2006. "Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Investors' Expectations," Journal of Finance, American Finance Association, vol. 61(2), pages 655-687, April.
    15. Ross Levine, 2005. "Law, Endowments and Property Rights," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 61-88, Summer.
    16. Errunza, Vihang R. & Miller, Darius P., 2000. "Market Segmentation and the Cost of the Capital in International Equity Markets," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(4), pages 577-600, December.
    17. Martin Fransman, 2004. "The telecoms boom and bust 1996-2003 and the role of financial markets," Journal of Evolutionary Economics, Springer, vol. 14(4), pages 369-406, October.
    18. Franklin Allen, 2005. "Corporate Governance in Emerging Economies," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(2), pages 164-177, Summer.
    19. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    20. Jackie Krafft & Jacques-Laurent Ravix, 2005. "The governance of innovative firms: An evolutionary perspective," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(3), pages 125-147.
    21. Sanjai Bhagat & Bernard Black & Margaret Blair, 2004. "Relational Investing And Firm Performance," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 27(1), pages 1-30, March.
    22. Jackie Krafft & Yiping Qu & Jacques-Laurent Ravix, 2008. "Corporate Governance, Industry Dynamics and Firms Performance: An Empirical Analysis of a Best Practice Model," Recherches économiques de Louvain, De Boeck Université, vol. 74(4), pages 455-478.
    23. Jackie Krafft & Yiping Qu & Jacques-Laurent Ravix, 2008. "Corporate governance, industry dynamics and firms performance on the stock market," Post-Print hal-00203544, HAL.
    24. Benjamin E. Hermalin & Michael S. Weisbach, 2003. "Boards of directors as an endogenously determined institution: a survey of the economic literature," Economic Policy Review, Federal Reserve Bank of New York, vol. 9(Apr), pages 7-26.
    25. Art Durnev & E. Han Kim, 2005. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," Journal of Finance, American Finance Association, vol. 60(3), pages 1461-1493, June.
    26. Himmelberg, Charles P. & Hubbard, R. Glenn & Palia, Darius, 1999. "Understanding the determinants of managerial ownership and the link between ownership and performance," Journal of Financial Economics, Elsevier, vol. 53(3), pages 353-384, September.
    27. Ciaran Driver & Grahame Thompson, 2002. "Corporate Governance and Democracy: The Stakeholder Debate Revisited," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 6(2), pages 111-130, May.
    28. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    29. Stefan Beiner & Wolfgang Drobetz & Markus M. Schmid & Heinz Zimmermann, 2006. "An Integrated Framework of Corporate Governance and Firm Valuation," European Financial Management, European Financial Management Association, vol. 12(2), pages 249-283, March.
    30. Wolfgang Drobetz & Andreas Schillhofer & Heinz Zimmermann, 2004. "Corporate Governance and Expected Stock Returns: Evidence from Germany," European Financial Management, European Financial Management Association, vol. 10(2), pages 267-293, June.
    31. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    32. Jackie Krafft & Jacques-Laurent Ravix, 2008. "The firm and its governance along the industry life cycle," Post-Print hal-00211206, HAL.
    33. Cristiano Antonelli & Alessandra Colombelli, 2011. "The generation and exploitation of technological change: market value and total factor productivity," The Journal of Technology Transfer, Springer, vol. 36(4), pages 353-382, August.
    34. Driver, Ciaran & Guedes, Maria João Coelho, 2012. "Research and development, cash flow, agency and governance: UK large companies," Research Policy, Elsevier, vol. 41(9), pages 1565-1577.
    35. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    36. Hã–Lzl, Werner, 2006. "Convergence of financial systems: towards an evolutionary perspective," Journal of Institutional Economics, Cambridge University Press, vol. 2(1), pages 67-90, April.
    37. Marie Carpenter & William Lazonick & Mary O'Sullivan, 2003. "The stock market and innovative capability in the New Economy: the optical networking industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(5), pages 963-1034, October.
    38. Daryl Koehn & Joe Ueng, 2005. "Evaluating the Evaluators: Should Investors Trust Corporate Governance Metrics Ratings?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 9(2), pages 111-128, June.
    39. Stephane Lhuillery, 2011. "The impact of corporate governance practices on R&D efforts: a look at shareholders' rights, cross-listing, and control pyramid," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 20(5), pages 1475-1513, October.
    40. Alessandra Colombelli, 2010. "Alternative Investment Market: A Way to Promote Entrepreneurship," Journal of Industry, Competition and Trade, Springer, vol. 10(3), pages 253-274, September.
    41. Marco Becht, 2005. "Corporate Governance: An Assessment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(2), pages 155-163, Summer.
    42. Black, Bernard, 2001. "The corporate governance behavior and market value of Russian firms," Emerging Markets Review, Elsevier, vol. 2(2), pages 89-108, June.
    43. Denis, Diane K., 2001. "Twenty-five years of corporate governance research ... and counting," Review of Financial Economics, Elsevier, vol. 10(3), pages 191-212.
    44. Bernard S. Black & Hasung Jang & Woochan Kim, 2006. "Does Corporate Governance Predict Firms' Market Values? Evidence from Korea," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 22(2), pages 366-413, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bianchini, Stefano & Krafft, Jackie & Quatraro, Francesco & Ravix, Jacques, 2015. "Corporate Governance, Innovation and Firm Age: Insights and New Evidence," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201502, University of Turin.
    2. Stéphane Lhuillery & Marion Tellechea & Stéphanie Thiery, 2021. "Open innovation in managerial innovation: the case of internal audit," Working Papers of BETA 2021-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Ivan Miroshnychenko & Stefano Bozzi & Roberto Barontini, 2019. "Firm Growth and Legal Environment," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 48(1), February.
    4. Ivan Miroshnychenko & Alfredo De Massis & Danny Miller & Roberto Barontini, 2021. "Family Business Growth Around the World," Entrepreneurship Theory and Practice, , vol. 45(4), pages 682-708, July.
    5. Ayi Gavriel Ayayi & Mahinda Wijesiri, 2022. "Is there a trade‐off between environmental performance and financial sustainability in microfinance institutions? Evidence from South and Southeast Asia," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1552-1565, May.
    6. Gérard Hirigoyen & Thierry Poulain-Rehm, 2017. "Comparative approach of governance models: an empirical study [Approche comparative des modèles de gouvernance : Une étude empirique]," Post-Print hal-02521878, HAL.
    7. Emiliano Brancaccio & Raffaele Giammetti & Milena Lopreite & Michelangelo Puliga, 2023. "Convergence in solvency and capital centralization: A B‐VAR analysis for high‐income and euro area countries," Metroeconomica, Wiley Blackwell, vol. 74(1), pages 40-73, February.
    8. Zeba Shariff khan, 2019. "Contribution Towards Understanding Of Corporate Governance: Thematic Analysis Of Review Papers On Corporate Governance: 1988- 2017," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 15(2), pages 152-181.
    9. Jehad S. Aldehayyat & Sliman S. Alsoboa & Mohammad H. Al-Kilani, 2017. "Investigating How Corporate Governance Affects Performance of Firm in Small Emerging Markets: An Empirical Analysis for Jordanian Manufacturing Firms," International Business Research, Canadian Center of Science and Education, vol. 10(1), pages 77-95, January.
    10. Ciaran Driver & Maria João Coelho Guedes, 2017. "R&D and CEO departure date: do financial incentives make CEOs more opportunistic?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(5), pages 801-820.
    11. Leo Vashkor Dewri, 2022. "A Critical Assessment of Interrelationship Among Corporate Governance, Financial Performance, Refined Economic Value Added to Measure Firm Value and Return on Stock," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2718-2759, December.
    12. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, September.
    13. Cioban (Lucan) Alexandra Narcisa, 2016. "The Influence Of The Corporate Governance Mechanisms And Audit Fees On The Financial Performance Measured With Roa," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 20-31, October.
    14. Francesco Testa & Ivan Miroshnychenko & Roberto Barontini & Marco Frey, 2018. "Does it pay to be a greenwasher or a brownwasher?," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 1104-1116, November.
    15. Cambini, Carlo & De Masi, Sara & Paci, Andrea & Rondi, Laura, 2018. "CEO compensation in EU telecom companies: Does the state design the right incentives?," Telecommunications Policy, Elsevier, vol. 42(6), pages 474-488.
    16. Zeba Shariff khan, 2019. "Contribution Towards Understanding Of Corporate Governance: Thematic Analysis Of Review Papers On Corporate Governance: 1988- 2017," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 15(2), pages 15-11.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:hal:wpaper:hal-00786664 is not listed on IDEAS
    2. Jackie Krafft & Jacques-Laurent Ravix, 2008. "Corporate Governance in Advanced Economies: Lessons in a Post Financial Crash Era.. Introduction to the Special Issue," Recherches économiques de Louvain, De Boeck Université, vol. 74(4), pages 419-424.
    3. Jacques-Laurent Ravix & Yiping Qu & Jackie Krafft, 2011. "Gouvernance d’entreprise et performances sectorielles : une réévaluation de la fiabilité des scores et des mesures de bonne gouvernance," Économie et Prévision, Programme National Persée, vol. 197(1), pages 145-158.
    4. Bianchini, Stefano & Krafft, Jackie & Quatraro, Francesco & Ravix, Jacques, 2015. "Corporate Governance, Innovation and Firm Age: Insights and New Evidence," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201502, University of Turin.
    5. Oded Cohen, 2020. "Measuring Corporate Governance Quality in Concentrated-Ownership Firms," Bank of Israel Working Papers 2020.06, Bank of Israel.
    6. Ammann, Manuel & Oesch, David & Schmid, Markus M., 2011. "Corporate governance and firm value: International evidence," Journal of Empirical Finance, Elsevier, vol. 18(1), pages 36-55, January.
    7. Anderson, Anne & Gupta, Parveen P., 2009. "A cross-country comparison of corporate governance and firm performance: Do financial structure and the legal system matter?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 5(2), pages 61-79.
    8. Bruno, Valentina & Claessens, Stijn, 2010. "Corporate governance and regulation: Can there be too much of a good thing?," Journal of Financial Intermediation, Elsevier, vol. 19(4), pages 461-482, October.
    9. Manuel Ammann & David Oesch & Markus Schmid, 2013. "The construction and valuation effect of corporate governance indices," Chapters, in: Adrian R. Bell & Chris Brooks & Marcel Prokopczuk (ed.), Handbook of Research Methods and Applications in Empirical Finance, chapter 13, pages 314-340, Edward Elgar Publishing.
    10. Luis H. Gutiérrez & Carlos Pombo, 2005. "Corporate Valuation and Governance: Evidence from Colombia," Research Department Publications 3216, Inter-American Development Bank, Research Department.
    11. Urbi Garay & Maximiliano González, 2008. "Corporate Governance and Firm Value: The Case of Venezuela," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(3), pages 194-209, May.
    12. Laeven, Luc & Chhaochharia, Vidhi, 2007. "The Invisible Hand in Corporate Governance," CEPR Discussion Papers 6256, C.E.P.R. Discussion Papers.
    13. Gérard Hirigoyen & Thierry Poulain-Rehm, 2017. "Comparative approach of governance models: an empirical study [Approche comparative des modèles de gouvernance : Une étude empirique]," Post-Print hal-02521878, HAL.
    14. Jackie Krafft & Yiping Qu & Jacques-Laurent Ravix, 2008. "Corporate governance, industry dynamics and firms performance on the stock market," Post-Print hal-00203544, HAL.
    15. Almaskati, Nawaf & Bird, Ron & Lu, Yue, 2020. "Corporate governance, institutions, markets, and social factors," Research in International Business and Finance, Elsevier, vol. 51(C).
    16. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, September.
    17. Yan-Leung Cheung & Yin Dang & Ping Jiang & Tong Lu & Weiqiang Tan, 2018. "Does the market care about investor protection practices in China?," Applied Economics, Taylor & Francis Journals, vol. 50(5), pages 492-509, January.
    18. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
    19. Klapper, Leora F & Laeven, Luc & Love, Inessa, 2005. "What drives corporate governance? Firm-level evidence from Eastern Europe," Policy Research Working Paper Series 3600, The World Bank.
    20. Lucian A. Bebchuk & Michael S. Weisbach, 2012. "The State of Corporate Governance Research," Springer Books, in: Sabri Boubaker & Bang Dang Nguyen & Duc Khuong Nguyen (ed.), Corporate Governance, edition 127, pages 325-346, Springer.
    21. Nicolas Kohl & Wolfgang Schaefers, 2012. "Corporate Governance and Market Valuation of Publicly Traded Real Estate Companies: Evidence from Europe," The Journal of Real Estate Finance and Economics, Springer, vol. 44(3), pages 362-393, April.

    More about this item

    Keywords

    firm performance; firm value; Corporate governance; governance metrics; ratings; rankings and scoring;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00786664. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.