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Does compliance with the German corporate governance code have an impact on stock valuation?: an empirical analysis

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Does compliance with the German corporate governance code have an impact on stock valuation? an empirical analysis. / Goncharov, Igor; Werner, Joerg Richard; Zimmermann, Jochen.

In: Corporate Governance: An International Review, Vol. 14, No. 5, 09.2006, p. 432-445.

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Goncharov, Igor ; Werner, Joerg Richard ; Zimmermann, Jochen. / Does compliance with the German corporate governance code have an impact on stock valuation? an empirical analysis. In: Corporate Governance: An International Review. 2006 ; Vol. 14, No. 5. pp. 432-445.

Bibtex

@article{0a6c410c6e6e4776ba27cdd0bee31b13,
title = "Does compliance with the German corporate governance code have an impact on stock valuation?: an empirical analysis",
abstract = "Since 2002 company law requires listed German corporations to declare their degree of conformity to the German Corporate Governance Code (GCGC). We examine whether there is a pricing effect connected to the declared degree of compliance for a sample of (big) publicly traded German companies listed in the DAX 30 and MDAX. We find that the degree of compliance with the Code is value-relevant after controlling for an endogeneity bias. This shows that the capital markets find the rules in the code meaningful and that there is capital market pressure to adopt the Code regulation. Our findings also suggest that the capital market fills a possible {"}control vacuum{"} resulting from the withdrawal of commercial banks from their (former) influential role in the German {"}insider control{"} corporate governance model.",
keywords = "corporate governance, value relevance, code compliance, declaration of conformity, Germany, VALUE-RELEVANCE, INFORMATION ASYMMETRY, CAPITAL-MARKETS, AGENCY COSTS, PERFORMANCE, EARNINGS, STATEMENTS, OWNERSHIP, RETURNS, SYSTEMS",
author = "Igor Goncharov and Werner, {Joerg Richard} and Jochen Zimmermann",
year = "2006",
month = sep,
doi = "10.1111/j.1467-8683.2006.00516.x",
language = "English",
volume = "14",
pages = "432--445",
journal = "Corporate Governance: An International Review",
issn = "0964-8410",
publisher = "Wiley-Blackwell",
number = "5",
note = "28th Annual Congress of the European-Accounting-Association ; Conference date: 18-05-2005 Through 20-05-2005",

}

RIS

TY - JOUR

T1 - Does compliance with the German corporate governance code have an impact on stock valuation?

T2 - 28th Annual Congress of the European-Accounting-Association

AU - Goncharov, Igor

AU - Werner, Joerg Richard

AU - Zimmermann, Jochen

PY - 2006/9

Y1 - 2006/9

N2 - Since 2002 company law requires listed German corporations to declare their degree of conformity to the German Corporate Governance Code (GCGC). We examine whether there is a pricing effect connected to the declared degree of compliance for a sample of (big) publicly traded German companies listed in the DAX 30 and MDAX. We find that the degree of compliance with the Code is value-relevant after controlling for an endogeneity bias. This shows that the capital markets find the rules in the code meaningful and that there is capital market pressure to adopt the Code regulation. Our findings also suggest that the capital market fills a possible "control vacuum" resulting from the withdrawal of commercial banks from their (former) influential role in the German "insider control" corporate governance model.

AB - Since 2002 company law requires listed German corporations to declare their degree of conformity to the German Corporate Governance Code (GCGC). We examine whether there is a pricing effect connected to the declared degree of compliance for a sample of (big) publicly traded German companies listed in the DAX 30 and MDAX. We find that the degree of compliance with the Code is value-relevant after controlling for an endogeneity bias. This shows that the capital markets find the rules in the code meaningful and that there is capital market pressure to adopt the Code regulation. Our findings also suggest that the capital market fills a possible "control vacuum" resulting from the withdrawal of commercial banks from their (former) influential role in the German "insider control" corporate governance model.

KW - corporate governance

KW - value relevance

KW - code compliance

KW - declaration of conformity

KW - Germany

KW - VALUE-RELEVANCE

KW - INFORMATION ASYMMETRY

KW - CAPITAL-MARKETS

KW - AGENCY COSTS

KW - PERFORMANCE

KW - EARNINGS

KW - STATEMENTS

KW - OWNERSHIP

KW - RETURNS

KW - SYSTEMS

U2 - 10.1111/j.1467-8683.2006.00516.x

DO - 10.1111/j.1467-8683.2006.00516.x

M3 - Journal article

VL - 14

SP - 432

EP - 445

JO - Corporate Governance: An International Review

JF - Corporate Governance: An International Review

SN - 0964-8410

IS - 5

Y2 - 18 May 2005 through 20 May 2005

ER -