Does one size fit all? Dynamic corporate governance and boardroom resilience across Western, Northern, and Southern Europe

This study investigates the dynamic relationship between corporate governance mechanisms and firm value across varying macroeconomic environments, analyzing the 2005 to 2025 timeframe. Based on a panel of 565 non-financial companies from the STOXX Europe 600 index, the empirical strategy employs fixed-effects, lagged-variable models, and the Two-Step System GMM estimator to address unobserved heterogeneity, reverse causality, and dynamic endogeneity. The results reject the static valuation of corporate governance. Contrary to conventional assumptions, board gender diversity does not command a standalone financial premium across any macroeconomic phase, while strict board independence and expanded board sizes are rewarded by investors strictly during periods of macroeconomic stability. In the meanwhile, centralized executive power (e.g. CEO board membership and lack of separation) is penalized during stable growth due to agency costs, yet temporarily tolerated during systemic crises to facilitate the rapid, agile decision-making required for immediate corporate survival. Furthermore, regional analysis highlights institutional heterogeneity: Western Europe rewards strict monitoring, Northern Europe utilizes expanded cognitive resources to navigate prolonged recoveries, and Southern Europe penalizes expanded boards due to bureaucratic inefficiencies inherent in family-dominated corporate landscapes. Ultimately, by proving the adaptable nature of governance valuation across multiple global crises, this article argues against a ‘one-size-fits-all’ regulatory approach, concluding that corporate boards must be evaluated contextually based on macroeconomic conditions and specific regional institutional frameworks.