A Cross Country Comparison of Corporate Governance and Firm Performance: Do Financial Structure and the Legal System Matter?

Journal of Contemporary Accounting and Economics, Forthcoming

Posted: 11 Jun 2009

See all articles by Anne M. Anderson

Anne M. Anderson

Middle Tennessee State

Parveen P. Gupta

Lehigh University - Department of Accounting

Date Written: June 10, 2009

Abstract

We blend the corporate governance and the financial structure/legal system literature streams to study whether firm performance is enhanced when its governance structure embodies the demands of the host country’s financial structure and legal system. Using a sample of 1,736 unique firms representing 22 countries, we find that the joint effect of a country’s financial structure and legal system does matter when explaining the relationship between performance and the overall level of corporate governance in a given country. The results also suggest that firms operating in the market/common combination countries tend to command higher market valuations than firms with a comparable level of corporate governance that operate in the bank/civil combination countries.

Keywords: Corporate Governance, Financial System, Market-based, Bank-based, Legal System, Common-law, Civil-law, Firm Performance, Tobin’s Q

JEL Classification: F30, G15, G28, G32, G34, K22, K40

Suggested Citation

Anderson, Anne M. and Gupta, Parveen P., A Cross Country Comparison of Corporate Governance and Firm Performance: Do Financial Structure and the Legal System Matter? (June 10, 2009). Journal of Contemporary Accounting and Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1417589

Anne M. Anderson

Middle Tennessee State ( email )

TN
United States

Parveen P. Gupta (Contact Author)

Lehigh University - Department of Accounting ( email )

621 Taylor Street
RBC #37
Bethlehem, PA 18015
United States
610-758-3443 (Phone)
610-758-5992 (Fax)

HOME PAGE: http://www.lehigh.edu

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