Table 4, Panel B, presents cluster membership of the sample countries across the three
clusters. Interestingly, all countries (except Sweden) in the first cluster are common law
while all countries in the second cluster are code law. This is consistent with the existence of
institutional complementarities found in most finance literature. The third cluster consists of
both common-law and code-law countries. Malaysia and Thailand, whose standards derive
from common-law sources (USA, UK, and IAS) are placed in the third cluster consistent
with their poor financial-reporting quality documented by Ball et al. (2003).