Corporate governance and regulation : can there be too much of a good thing ?

For a large number of companies from different countries, the authors analyze how company corporate governance practices and country regulatory regimes interact in terms of company valuation. They confirm that corporate governance plays a crucial role in efficient company monitoring and shareholder protection, and consequently positively impacts valuation. They find substitution in valuation impact between corporate governance measures at the company and country level, with a possibility of over-regulation. Corporate governance appears more valuable for companies that rely heavily on external financing, consistent with the hypothesis that the main role of corporate governance is to protect external financiers.National Governance,Governance Indicators,Corporate Law,Microfinance,Small Scale Enterprise

Do standard corporate governance practices matter in family firms?

We study the unique governance dynamics surrounding family ownership in a voluntary regulatory arena where we can directly observe the impact of firm ownership on corporate governance practices pertaining to the composition of the board of directors. We find that family firms are more likely to deviate from standards of best practice in corporate governance. However, lesser governance standards in family firms are not associated with lower performance because the family shareholder is the monitor in-place. In contrast, governance practices and disclosures matter in widely-held firms because they alleviate the conflicts between managers and dispersed shareholders. More broadly, our results show that family ownership and board governance practices are substitute governance mechanisms

Does the banks’ performance improve after share buybacks?

Share buybacks have become a popular way for companies to return capital to shareholders. However, there is an ongoing debate regarding the impact of share buybacks on the performance and shareholder value. This paper starts by examining the literature on share buybacks and aims at testing the signalling hypothesis (ie share buybacks are carried out to signal undervaluation of the stock) on share repurchases performed by banks. More specifically, the analysis conducted measured the impact of share buybacks on banks’ performance as measured by the return on equity (ROE). The results show that there is low significant positive linear relationship between banks’ share buybacks and their RO