The (Ir)relevance of Disclosure of Compliance with Corporate Governance Codes: Empirical Evidence from the German Stock Market

This paper studies short- and long-run effects of disclosure of compliance with the German Corporate Governance Code. First, we present an analysis of firms' compliance with the Code. Second, event-study results suggest that aggregate market and firm values are unaffected, although there was widespread belief that market reactions would follow the disclosure of the declaration of conformity. Third, for the long horizon, we find that neither levels nor changes in Code compliance levels have an impact on stock price performance. Our results add evidence to the hypothesis that self-regulatory corporate governance reforms relying on disclosure without monitoring and legal enforcement are ineffective.