Who makes the grade and why? Corporate governance scores in Thailand

Purpose – The purpose of this paper is to describe the characteristics of publically listed firms in Thailand that have achieved superior corporate governance scores (CGSs) and their motivations. Design/methodology/approach – In-depth interviews with CFOs and directors were conducted to gain insights into the firms’ motivations in increasing their CGS. Multiple regression, ANOVA and t-tests were employed to examine the score patterns. In total, we collected a year’s data from 502 companies from the 2010 Thai stock market database. Findings – Interview results suggest that high CGS can: first, help reduce the cost of debt; second, help the firm achieve incremental profitability; third, improve a firm’s value and stock price; and fourth, create confidence among insiders and build trust among outsiders. The quantitative analysis indicates that large state enterprises and widely held companies that issue bonds are significantly more likely to obtain good CGS. Frequency of board meetings and superior financial performance are also associated with higher governance ratings. Originality/value – This study systematically examines the characteristics of companies achieving different corporate governance rankings and investigates possible motivations behind their choices.