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Do Firms Decouple Corporate Governance Policy and Practice?


  • Financial support from a CMMU faculty research grant is gratefully acknowledged. We thank an anonymous referee for valuable comments and suggestions. We also thank Barry Eichengreen, Ingolf Dittmann, Vikramaditya Khanna, Anzhela Knyazeva, Michael Lemmon, Nareerat Taechapiroontong, Thanaphol Virasa, Kelvin Willoughby for their comments, along with participants at the European Financial Management Association 2008 meeting, the Asian Finance Association 2008 meeting, the EFM Symposium 2009 on Corporate Governance and Control, and the 2009 Journal of Corporate Finance Conference on Corporate Finance and Governance in Emerging Markets. We are indebted to the Corporate Governance Center of the Stock Exchange of Thailand for providing data on corporate governance of Thai listed firms. Special thanks to Suraphon Buphakosum of the SET CG Center for his help. All errors are our own. Correspondence: Roy Kouwenberg.


We test whether Thai listed firms with higher levels of good governance policy adoption are less likely to violate listing rules and laws designed to protect shareholders. Our results suggest that firms on average implement, substantively as opposed to symbolically, recommended governance policies, as violations occur less frequently among firms with higher governance policy adoption scores. However, we also find evidence of symbolic governance among a small group of ‘talk-only’ firms that issue statements about governance while lagging in the adoption of policies related to shareholder rights and the board of directors.