Revisiting the prescription of corporate governance standards: a panacea for big players and SMEs in the German financial industry alike? Online publication date: Fri, 27-Dec-2013
by Markus Stiglbauer
International Journal of Globalisation and Small Business (IJGSB), Vol. 5, No. 3, 2013
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.
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