Title: Revisiting the prescription of corporate governance standards: a panacea for big players and SMEs in the German financial industry alike?

Authors: Markus Stiglbauer

Addresses: School of Business and Economics, University of Erlangen-Nürnberg, Lange Gasse 20, 90403 Nuremberg, Germany

Abstract: Bad corporate governance has been criticised as one reason for the failure of financial companies in the current crisis. Nevertheless, this discussion almost exclusively referred to big players so far. Our paper investigates and compares both, big players as well as SMEs in the German financial sector. We find remarkable differences between the two sub-samples concerning compliance with German corporate governance standards. Furthermore, considering the impact of compliance with German corporate governance standards on performance, we surprisingly do not find differences between both groups with respect to total shareholder return, but big companies with high compliance rates demonstrating a significantly impact on return on equity which we cannot find for SMEs. This opens a discussion whether the existing standards of 'good' corporate governance in Germany are even able to help SMEs to lower their agency costs.

Keywords: corporate governance standards; firm performance; financial industry; small business; SMEs; small and medium-sized enterprises; Germany; Europe; compliance rates; total shareholder return; return on equity; agency costs.

DOI: 10.1504/IJGSB.2013.054887

International Journal of Globalisation and Small Business, 2013 Vol.5 No.3, pp.170 - 188

Received: 21 Jul 2012
Accepted: 24 Sep 2012

Published online: 27 Dec 2013 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article