Corporate Governance and Firm Value: International Evidence
Journal
Journal of Empirical Finance
ISSN
0927-5398
ISSN-Digital
1879-1727
Type
journal article
Date Issued
2011-01
Author(s)
Abstract
In this paper, we investigate the relation between firm-level corporate governance and firm value based on a large and previously unused dataset from Governance Metrics International (GMI) comprising 6,663 firm-year observations from 22 developed countries over the period from 2003 to 2007. Based on a set of 64 individual governance attributes we construct two alternative additive corporate governance indices with equal weights attributed to the governance attributes and one index derived from a principal component analysis. For all three indices we find a strong and positive relation between firm-level corporate governance and firm valuation. In addition, we investigate the value relevance of governance attributes that document the companies' social behavior. Regardless of whether these attributes are considered individually or aggregated into indices, and even when "standard" corporate governance attributes are controlled for, they exhibit a positive and significant effect on firm value. Our findings are robust to alternative calculation procedures for the corporate governance indices and to alternative estimation techniques.
Language
English
Keywords
Corporate Governance
Firm Valuation
Minimum Standards
Principal Component Analysis
Corporate Social Responsibility
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
18
Number
1
Start page
36
End page
55
Pages
20
Subject(s)
Eprints ID
69867
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Ammann_Oesch_Schmid_2010_CorporateGovernance_.pdf
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Format
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