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Esther B. Del Brio ORCID logo, Elida Maia-Ramires ORCID logo, Javier Perote ORCID logo


Previous studies have cast doubts on the effectiveness of corporate governance codes in Continental- European countries, due to their Anglo-Saxon orientation. We chose a Continental-European country with an Anglo-Saxon orientated code, such as Spain, and analyse the effects of the recommendations proposed in the Spanish Olivencia Code on the value of the firm. By using panel data estimation, we analyse the impact on firm’s value of some corporate governance related variables, such as the quality of audit reports, the magnitude of director remuneration, the reporting on director remuneration or the firm size. Results suggest a positive relationship between good corporate governance practices and the value of the company. Moreover, the more transparent the company is and the more favourable audit reports they obtain, the better the firm’s value. We also conclude that it is the degree of compliance with the codes, rather than the mere reporting of whether firms comply or not with them, which increases firm’s value.

Keywords: Сorporate Governance Code, Compliance, Director Remuneration, Panel Data

How to cite this paper: Del Brio, E. B., Maia-Ramires, E., & Perote, J. (2006). Corporate governance mechanisms and their impact on firm value. Corporate Ownership & Control, 4(1), 25-36.