Abstract
In this paper the use of ratings as a measure of the quality of corporate governance of firms is explored to investigate the convergence of governance models. To study the evolution of such models in Europe, the proposed approach considers institutional-specific effects to analyse the determinants of the probability of a firm improving its rating, as well as the probabilities of transitioning between different levels of ratings. The methodology is based on binary and ordered choice probit models, and is illustrated using the official Deminor's governance ratings for a sample of 198 European companies belonging to the FTSE Eurofirst 300 index, in 2000 and 2003. Results suggest that there is a tendency for convergence, despite country-specific characteristics, and that the probability of increasing ratings is higher for the Anglo-Saxon model.
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