In this paper, we examine the universality of “good” corporate governance practices as exemplified by the
Anglo-American governance paradigm. Using a new database from Governance Metrics International
featuring highly granular measures of corporate governance practices across a large number of countries
for the period 2006-2011, we first find that the national cultural dimension of individualism is positively
associated with transparent disclosure and explicit corporate policy, and uncertainty avoidance is
negatively associated with transparent disclosure and minority shareholder protection. In addition, the
stock market-based (versus bank-based) financial system of a country is negatively associated with
transparent disclosure and minority shareholder protection. We further find that firm-level corporate
governance practices are positively associated with firm performance. The relation between firm-level
corporate governance practices and firm performance is stronger in countries with a well-developed stock
market. We conclude that national culture matters in firms’ adoption of “good” corporate governance
practices, and that the effect of firm-level corporate governance practices on firm performance depends
on whether firms are compared within a country or across countries.
pdf (it, 223 KB, 01/07/14)
