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Shareholder Value Implications of Compliance with the German Corporate Governance Code

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  • Thomas Kaspereit
  • Kerstin Lopatta
  • Dennis Onnen

Abstract

This study contributes to the ongoing discussion of the German Corporate Governance Code (GCGC) of the Regierungskommission Deutscher Corporate Governance Kodex (Government Commission), which should enhance the confidence of national and international investors. We apply the Feltham and Ohlson ( ) valuation model to a panel dataset of 421 German CDAX firms over the period 2002–2012 and find a positive effect of the level of compliance with the GCGC on the market value of firms. We conclude that the recommendations of the GCGC reflect corporate governance that satisfies investors' needs, as the capital markets perceive them. Our results are in favor of the efforts of the Government Commission, which have attracted criticism from both theorists and practitioners both in the past and at present. From the perspective of managerial and decision economics, the empirical results of this study suggest that executives should follow as many recommendations of the GCGC as possible. Copyright © 2015 John Wiley & Sons, Ltd.

Suggested Citation

  • Thomas Kaspereit & Kerstin Lopatta & Dennis Onnen, 2017. "Shareholder Value Implications of Compliance with the German Corporate Governance Code," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(2), pages 166-177, March.
    • Handle: RePEc:wly:mgtdec:v:38:y:2017:i:2:p:166-177
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    Cited by:

    1. Weihua Liu & Jiahui Zhang & Jiahe Hou & Siyu Wang, 2021. "Effect of intelligent logistics transformation announcements on shareholder value: Evidence from Chinese listed firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(5), pages 1194-1219, July.
    2. Kerstin Lopatta & Thomas Kaspereit & Laura‐Maria Gastone, 2020. "Managerial style in cost asymmetry and shareholder value," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(5), pages 800-826, July.
    3. Bravo-Urquiza, Francisco & Moreno-Ureba, Elena, 2021. "Does compliance with corporate governance codes help to mitigate financial distress?," Research in International Business and Finance, Elsevier, vol. 55(C).
    4. Maria Aluchna & Tomasz Kuszewski, 2020. "Does Corporate Governance Compliance Increase Company Value? Evidence from the Best Practice of the Board," JRFM, MDPI, vol. 13(10), pages 1-21, October.

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