Corporate Governance and Equity Prices

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ID: 289438
2003
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Abstract
Shareholder rights vary across firms. Using the incidence of 24 governance rules, we construct a "Governance Index" to proxy for the level of shareholder rights at about 1500 large firms during the 1990s. An investment strategy that bought firms in the lowest decile of the index (strongest rights) and sold firms in the highest decile of the index (weakest rights) would have earned abnormal returns of 8.5 percent per year during the sample period. We find that firms with stronger shareholder rights had higher firm value, higher profits, higher sales growth, lower capital expenditures, and made fewer corporate acquisitions.
Reference Key
openalex_W4233420185 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Paul A. Gompers, Joy Ishii, Andrew Metrick
Journal the quarterly journal of economics
Year 2003
DOI
10.1162/00335530360535162
URL
https://doi.org/10.1162/00335530360535162
Keywords Keywords not found

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