A Corporate Governance Index: Convergence and Diversity of National Corporate Governance Regulations

CentER Discussion Paper Series No. 2010-17

TILEC Discussion Paper No. 2010-012

35 Pages Posted: 24 Feb 2010 Last revised: 16 Mar 2010

See all articles by Marina Martynova

Marina Martynova

U.S. Securities and Exchange Commission

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: February 23, 2010

Abstract

The issue of appropriate corporate governance framework has been a focal point of recent reforms in many countries. This study provides a comprehensive comparative analysis of corporate governance regulatory systems and their evolution over the last 15 years in 30 European countries and the US. It proposes a methodology to create detailed corporate governance indices which capture the major features of capital market laws in the analysed countries. The indices indicate how the law in each country addresses various potential agency conflicts between corporate constituencies: namely, between shareholder and managers, between majority and minority shareholders, and between shareholders and bondholders. The analysis of regulatory provisions within the suggested framework enables us to understand better how corporate law works in a particular country and which strategies regulators adopt to achieve their goals. The 15-year time series of constructed indices and large country-coverage (30 European countries and the US) also allows us to draw conclusions about the convergence of corporate governance regimes across the countries. To our best knowledge, this is the first study that intends to address the convergence debate empirically. The analysis is based on a unique corporate governance database that comprises the main changes in corporate governance regulations in the US and all European countries between 1990-2005.

Keywords: governance regulation, convergence, corporate governance, agency problem, ownership and control, LLSV

JEL Classification: G3, G34, G38, K2, K22, K40, G32

Suggested Citation

Martynova, Marina and Renneboog, Luc, A Corporate Governance Index: Convergence and Diversity of National Corporate Governance Regulations (February 23, 2010). CentER Discussion Paper Series No. 2010-17, TILEC Discussion Paper No. 2010-012, Available at SSRN: https://ssrn.com/abstract=1557627 or http://dx.doi.org/10.2139/ssrn.1557627

Marina Martynova (Contact Author)

U.S. Securities and Exchange Commission ( email )

100 F St. NE
Washington, DC 20549
United States

Luc Renneboog

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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