Corporate governance transparency: Do firm-level ethics policies and country-level investor protections substitute or complement?

This study empirically investigates the direct and interactive effects of firm-level ethics policies and country-level investor protection on firm corporate governance transparency. Using data on 9298 firms collected from the Bloomberg Terminal, we find that there is a positive relationship between country-level investor protection and firm corporate governance transparency. The results also support the argument that firms with existing ethics policies exhibit greater corporate governance transparency. We also find that in countries with weaker investor protection, the impact of firm-level ethics policies on corporate governance transparency is stronger. This study advances our understanding of the corporate governance transparency determinants, and the empirical evidence supports the notion that firm-level factors such as ethics policies may compensate for the lack of formal national investor protection regulations.