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

THE EFFECTIVENESS OF CORPORATE GOVERNANCE CODES: LONG-TERM ANALYSIS FROM EAST ASIA 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of International Commerce, Economics and Policy World Scientific Publishing Company

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

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Publisher
World Scientific Publishing Company
Copyright
Copyright ©
ISSN
1793-9933
eISSN
1793-9941
DOI
10.1142/S1793993311000294
Publisher site
See Article on Publisher Site

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.

Journal

Journal of International Commerce, Economics and PolicyWorld Scientific Publishing Company

Published: Dec 1, 2011

Keywords: Board of directors codes of good governance corporate governance East Asia

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