2005.8.17
Seminar Title: To Trust the Fat Cat(s) to Keep the Cream: An Empirical Analysis of Self-Regulation under the German Corporate Governance Code
Time: 2:00pm-3:30am, Wednesday, August 17, 2005
Language: English
Speaker: Prof. Eric Nowak, Institute of Finance, University of Lugano, Switzerland

Abstract: This paper studies the short-run announcement and long-run effects of compliance with the German Corporate Governance Code ("The Code") on firm value. First, we present evidence and implications from an analysis of firms' compliance behaviour regarding the Code. Second, event study results suggest that firm value is unaffected by the announcement, although such market reactions to the first time disclosure of the declaration of conformity were widely assumed by the private and public promoters of the Code. Finally, we find that acceptance of the Code has no long-term impact neither on stock price performance nor on relative market valuation (as measured by Tobin's Q). These results from acceptance of the German Code add further evidence to the hypothesis that self-regulatory corporate governance reform initiatives that rely on mandatory disclosure without monitoring and enforcement are ineffective.