What Matters in Corporate Governance?

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ID: 290190
2008
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Abstract
We investigate the relative importance of the twenty-four provisions followed by the Investor Responsibility Research Center (IRRC) and included in the Gompers, Ishii, and Metrick governance index (Gompers, Ishii, and Metrick 2003). We put forward an entrenchment index based on six provisions: staggered boards, limits to shareholder bylaw amendments, poison pills, golden parachutes, and supermajority requirements for mergers and charter amendments. We find that increases in the index level are monotonically associated with economically significant reductions in firm valuation as well as large negative abnormal returns during the 1990–2003 period. The other eighteen IRRC provisions not in our entrenchment index were uncorrelated with either reduced firm valuation or negative abnormal returns.
Reference Key
openalex_W4251380393 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Lucian A. Bebchuk, Alma Cohen, Allen Ferrell
Journal review of financial studies
Year 2008
DOI
10.1093/rfs/hhn099
URL
https://doi.org/10.1093/rfs/hhn099
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