Research Question/Issue: The purpose of this study is to examine how differences in "ownership dispersion" and "exposure toward the international capital market" affect the particular use of the corporate governance mechanisms "transparency" and "board independence" in listed companies.

Research Findings/Insights: Our findings are based on a Danish dataset which includes 100 listed companies. We find that transparency is a more important corporate governance mechanism for companies with an exposure toward the international capital market, while differences in ownership dispersion do not affect the use of the transparency mechanism. In contrast, we find that board independence in the context of a two-tier board member system is an important corporate governance mechanism for companies with widely dispersed ownership and not for companies with an exposure toward the international capital market.

Theoretical/Academic Implications: The relationships identified in our study contribute to improved understanding of the contextual relationship between good corporate governance and the companies' choice of corporate governance mechanisms within a given corporate governance system. This is important in order to interpret inconsistencies in prior research findings and provide insight for the design of future studies into the seemingly endogenous nature of many corporate governance relationships.

Practitioner/Policy Implications: The requirement to adhere to the "comply or explain rules" for corporate governance has become commonplace for listed companies. The study provides insight into valid reasons for differences in compliance. Regulators and other capital market participants should acknowledge that companies may differ in their use of corporate governance mechanisms for various reasons, including differences in ownership dispersion and exposure toward the international capital market.