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We investigate the impact governance standards have on financial performance of firms operating across various political and socioeconomic regimes. Specifically, we examine the performance of non-cross-listed emerging market firms that implement corporate governance standards similar to those mandated of firms listed on US exchanges. Using cross-sectional time-series analysis, we find that a more rigorous corporate governance structure is associated with better performance (as measured by return on assets (ROA)) among non-cross-listed firms. Cross-listed firms, whose common stock trades as American Depository Receipts (ADRs) and who are subject to the same listing requirements as domestic US firms, exhibit no evidence of improved performance. We also find that the positive performance effect of improving corporate governance is mitigated among firms with higher market risk (i.e., beta).

This study examines emerging market firms that adopt corporate governance standards similar to those in the US. The investigation highlights the impact governance standards may have on corporate risk taking, as measured by stock return volatility, under varying political and socioeconomic regimes. In a cross-sectional time-series setting, the analysis reveals that enhanced governance standards are associated with risk reductions among US domiciled firms, cross-listed American Depository Receipt companies (ADRs) and non-cross listed emerging market (EM) firms. The effect of these governance standards on risk taking, however, does not deviate considerably between cross-listed ADRs that are exposed to Securities and Exchange Commission (SEC) mandated regulations and non-cross-listed EM firms that are not subject to the same regulatory constraints. Also, in some respects, Chinese firms seem to exhibit corporate behavior that is contrary to that of the rest of the world."

This study examines emerging market firms that adopt corporate governance standards similar to those in the US. The investigation highlights the impact governance standards may have on corporate risk taking, as measured by stock return volatility, under varying political and socioeconomic regimes. In a cross-sectional time-series setting, the analysis reveals that enhanced governance standards are associated with risk reductions among US domiciled firms, cross-listed American Depository Receipt companies (ADRs) and non-cross listed emerging market (EM) firms. The effect of these governance standards on risk taking, however, does not deviate considerably between cross-listed ADRs that are exposed to Securities and Exchange Commission (SEC) mandated regulations and non-cross-listed EM firms that are not subject to the same regulatory constraints. Also, in some respects, Chinese firms seem to exhibit corporate behavior that is contrary to that of the rest of the world. (C) 2018 Published by Elsevier Espana, S.L.U. on behalf of ACEDE. ; Publisher's Version