The enactment of corporate governance guidelines: an empirical examination

Michael Rubach (Associate Professor of Management, University of Central Arkansas, Conway, Arkansas, USA.)
Armand Picou (Assistant Professor of Finance, Texas A&M University – Corpus Christi, Corpus Christi, Texas, USA)

Corporate Governance

ISSN: 1472-0701

Publication date: 1 December 2005



The purpose of this paper is to examine the stock price reaction to the first announcement in SEC filings of the enactment of corporate governance guidelines. Agency and management theories suggest the enactment of guidelines should create value for the owners.


The paper uses an event study methodology on a sample of 141 firms.


The research finds only a few firms exhibited a significant reaction. Overall, the data were not significant. Searching for first‐ or late‐mover advantages was also unsuccessful. However, the increased enactment of guidelines (bandwagon effect) supports first order imitation possibly due to the board interlocks found. The results indicate two possible explanations. First, SEC filings may not be a strong signal for the overall market resulting in a potentially unrealized stock value transferred to those few who act on the signal. Second, the value of the guidelines may be unclear to investors. In either case, more public disclosure (i.e. greater transparency) for the adoption of corporate governance guidelines may resolve the issue.


This paper provides valuable information on the value of corporate governance guidelines.



Rubach, M. and Picou, A. (2005), "The enactment of corporate governance guidelines: an empirical examination", Corporate Governance, Vol. 5 No. 5, pp. 30-38.

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Copyright © 2005, Emerald Group Publishing Limited

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