The effect of corporate governance regulations on firm value : New Zealand evidence

Abstract

Research Question/Issue: This paper examines the effect that compliance with corporate governance regulations has on the value of New Zealand firms. Research Findings/Insights: From a sample of 70 New Zealand firms over the period 2000 to 2007, we find that firms that have a high level of compliance with corporate governance regulations have higher value to investors. Theoretical/Academic Implications: Consistent with agency theory, this paper documents that voluntary compliance with corporate governance regulations and/or guidelines increases the effective monitoring of firm performance. Agency costs associated with the control of managerial discretion are mitigated as a result of this voluntary compliance. Practitioner/Policy Implications: This study will be of interest to those who set regulations and/or guidelines that aim to promote good corporate governance practice.