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- Title
Variation in Corporate Governance and Firm Valuation - an International Study.
- Authors
Fan, Steve Z.; Yu, Linda
- Abstract
In this paper, we investigate the types of firms that are likely to deviate from common practice in corporate governance of their home countries and examine how the deviation is correlated with firm value. Our results show that firms with higher institutional holdings, lower insider holdings, and higher sales growth are more likely to deviate from common practice in civil law countries, whereas, in common law countries, especially in the USA, firms with lower institutional holdings, higher insider holdings, and lower sales growth are likely to deviate from common practice. We document a strong positive correlation between governance deviation and firm value in civil law countries. This relationship is robust to different testing and sample selection methods. The results, however, are mixed for US firms and not significant in other common law countries. Using the deviation from common practice as a proxy of firm-level impact on corporate governance, our results provide evidence that firm-level effect matters in governance quality and the effect varies across countries.
- Subjects
UNITED States; CORPORATE governance; VALUATION of corporations; CIVIL law; SALES management; INDUSTRIAL management
- Publication
International Review of Finance, 2016, Vol 16, Issue 4, p525
- ISSN
1369-412X
- Publication type
Article
- DOI
10.1111/irfi.12096