THE EFFECTIVENESS OF CORPORATE GOVERNANCE CODES: LONG-TERM ANALYSIS FROM EAST ASIA

En-Te Chen () and John Nowland ()
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En-Te Chen: School of Economics and Finance, Queensland University of Technology, Australia
John Nowland: Department of Accountancy, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong

Journal of International Commerce, Economics and Policy (JICEP), 2011, vol. 02, issue 02, 229-250

Abstract: This study examines the effectiveness of corporate governance codes in four East Asian markets by investigating the timing and persistence of firm compliance with code recommendations. Over the period 1999 to 2009 we find a number of significant improvements in code compliance, but not all can be attributed to the introduction of code recommendations. We also provide evidence of the codes having unintended consequences — firms previously with higher board or committee independence reducing their independence to code recommendation levels. Our results suggest that code recommendations targeting the creation of new mechanisms (e.g., remuneration committees) have been effective but that policymakers need to be particularly careful when formulating code recommendations about existing governance practices.

Keywords: Board of directors; codes of good governance; corporate governance; East Asia; G34; G38; G15 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1142/S1793993311000294

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