An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Anne Anderson
Lehigh University

Parveen Gupta
Lehigh University

Abstract: The corporate governance literature has primarily addressed the link between corporate governance and firm performance. Another stream of research has examined the role of the financial structure as well as the role of the legal system on the process by which financial systems develop and facilitate the process of raising and allocating capital. In this study we combine these two streams of the literature to examine, within an international context, the effects of the financial structure and the legal system on corporate governance and proceed to investigate the impact on firm performance. Our sample contains firms from twenty two countries. Our preliminary results suggest that both matter in explaining the variation in the level of corporate governance across various countries. The highest corporate governance values (as measured by the ISS CGQ index) are found in countries with market-based financial systems and common law-based legal systems.

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