Corporate Governance Structure and the Valuation of Australian Firms: Is There Value in Ticking the Boxes?

This paper provides an investigation of the valuation and agency consequences of corporate governance policy. This is achieved by examining variation in voluntary adoption by Australian listed firms, during the period from 1992 to 2002, of corporate governance frameworks representative of the governance code of practice introduced by the Australian Stock Exchange in 2003. The findings indicate benefits for firms from overall corporate governance structuring, but not in isolation, in line with the requirements now in place, and a significant role played by institutional and external shareholders as alternative agency mechanisms. Corporate governance structure is found to be important, however, the likely impact of disclosure of governance practice or compliance on valuation is less clear.