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Diffusion of regulatory innovations: the case of corporate governance codes

Gerner-Beuerle, Carsten; (2017) Diffusion of regulatory innovations: the case of corporate governance codes. Journal of Institutional Economics , 13 (02) pp. 271-303. 10.1017/S1744137416000412. Green open access

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Abstract

Since the 1990s, most European countries have adopted detailed corporate governance codes regulating listed companies. Even though the initial codes were designed against the backdrop of a particular jurisdiction, best practice standards have become remarkably similar across legal traditions. This raises the question whether the codes are sufficiently responsive to local conditions, or standard setters are mainly motivated by the concern not to fall behind internationally accepted benchmark standards. The article quantifies central corporate governance provisions and maps their international diffusion. Controlling for differences in legal families and ownership structure, the article shows that the diffusion of best practice standards leads to a statistically significant increase in the likelihood that a foreign standard setter will adopt a broadly similar provision. The findings indicate that codes are often seen as signalling devices, irrespective of whether or not the adopted standards are well aligned with the domestic economic and legal environment.

Type: Article
Title: Diffusion of regulatory innovations: the case of corporate governance codes
Open access status: An open access version is available from UCL Discovery
DOI: 10.1017/S1744137416000412
Publisher version: http://doi.org/10.1017/S1744137416000412
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of Laws
URI: http://discovery.ucl.ac.uk/id/eprint/10041160
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