Corporate Governance and Expected Stock Returns

Corporate Governance and Expected Stock Returns PDF

Author: Andreas Schillhofer

Publisher: Springer-Verlag

Published: 2013-03-08

Total Pages: 210

ISBN-13: 3322815609

DOWNLOAD EBOOK →

Based on his Corporate Governance Rating (CGR) for German firms, Andreas Schillhofer documents a positive relationship between the CGR and firm value. In addition, there is strong evidence that expected returns are negatively correlated with the CGR if dividend yields and price-earnings ratios are used as proxies for the cost of capital.

Corporate Governance and Expected Stock Returns

Corporate Governance and Expected Stock Returns PDF

Author: Wolfgang Drobetz

Publisher:

Published: 2010

Total Pages: 51

ISBN-13:

DOWNLOAD EBOOK →

Recent empirical work shows that a better legal environment leads to lower expected rates of return in an international cross-section of countries. This paper investigates whether differences in firm-specific corporate governance also help to explain expected returns in a cross-section of firms within a single jurisdiction. Constructing a corporate governance rating (CGR) for German firms, we document a positive relationship between the CGR and firm value. In addition, there is strong evidence that expected returns are negatively correlated with the CGR, if dividend yields and price-earnings ratios are used as proxies for the cost of capital. Most results are robust for endogeneity, with causation running from corporate governance practices to firm fundamentals. Finally, an investment strategy that bought high-CGR firms and shorted low-CGR firms would have earned abnormal returns of around 12 percent on an annual basis during the sample period. We rationalize the empirical evidence with lower agency costs and/or the removal of certain governance malfunctions for the high-CGR firms.

Business Environment and Firm Entry

Business Environment and Firm Entry PDF

Author: Leora Klapper

Publisher: World Bank Publications

Published: 2004

Total Pages: 60

ISBN-13:

DOWNLOAD EBOOK →

"Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing entry. We find entry regulations hamper entry, especially in industries that naturally should have high entry. Also, value added per employee in naturally "high entry" industries grows more slowly in countries with onerous regulations on entry. Interestingly, regulatory entry barriers have no adverse effect on entry in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations are neither benign nor welfare improving. However, not all regulations inhibit entry. In particular, regulations that enhance the enforcement of intellectual property rights or those that lead to a better developed financial sector do lead to greater entry in industries that do more R & D or industries that need more external finance"--National Bureau of Economic Research web site.

Corporate Governance and Long-term Stock Returns

Corporate Governance and Long-term Stock Returns PDF

Author: Theodore Clark Moorman

Publisher:

Published: 2005

Total Pages:

ISBN-13:

DOWNLOAD EBOOK →

Extant literature finds that long-term abnormal stock returns are generated by a strategy based on corporate governance index values (Gompers, Ishii, and Metrick2003). The result is inconsistent with efficient markets and suggests that information about governance is not accurately reflected in market data. Control firm portfolios are used to mitigate model misspecification in measuring long-term abnormal returns. Using a number of different matching criteria and governance indices, no long-term abnormal returns are found to trading strategies based on corporate governance. The effect of a change in governance on firm value is mixed, but some support is found for poor governance destroying firm value. These results have a number of implications for practitioners, researchers, and policy makers.

Irrational Exuberance Reconsidered

Irrational Exuberance Reconsidered PDF

Author: Mathias Külpmann

Publisher: Springer Science & Business Media

Published: 2013-03-20

Total Pages: 233

ISBN-13: 3540247653

DOWNLOAD EBOOK →

Mathias Külpmann presents a framework to evaluate whether the stock market is in line with underlying fundamentals. The new and revised edition offers an up to date introduction to the controversy between rational asset pricing and behavioural finance. Empirical evidence of stock market overreaction are investigated within the paradigms of rational asset pricing and behavioural finance. Although this monograph will not promise the reader to become a millionaire, it offers a road to obtain a deeper understanding of the forces which drive stock returns. It should be of interest to anyone interested in what drives performance in the stock market.

Corporate Governance, the Cross Section of Returns and Financing Choices

Corporate Governance, the Cross Section of Returns and Financing Choices PDF

Author: Erica X. N. Li

Publisher:

Published: 2016

Total Pages: 60

ISBN-13:

DOWNLOAD EBOOK →

I develop a dynamic model of corporate investment with taxes, costly equity and debt financing, agency conflicts between shareholders and managers, and a parameterized time-varying pricing kernel. The framework allows me to explore both the cross section of returns and firms' financing choices. In the model, managers seek private benefits proportional to the sizes of the firms, leading to empire-building behaviors. Corporate governance is modeled explicitly as a mechanism for shareholders to discipline managers. The predictions of the model are consistent with the recent empirical findings: (1) firms with stronger governance outperform firms with weaker governance in booms and underperform these firms in recessions; (2) firms with weaker governance enjoy lower costs of debt financing and rely less on equity financing than firms with stronger governance do. I also empirically test the predictions of the model on expected stock returns.

Advances in Corporate Finance and Asset Pricing

Advances in Corporate Finance and Asset Pricing PDF

Author: Luc Renneboog

Publisher: Emerald Group Publishing

Published: 2006-03-02

Total Pages: 569

ISBN-13: 0444527230

DOWNLOAD EBOOK →

Incorporates estimation risk in portfolio choice and also covers a risk measure for retail investment products, understanding and exploiting momentum in stock returns. This book includes: Introduction - Corporate restructuring; mergers and acquisitions in Europe; and the performance of acquisitive companies in the US.

Investigating the Effect of Corporate Sovereignty Mechanisms on the Stock Returns of Listed Companies of Tehran Stock Exchange

Investigating the Effect of Corporate Sovereignty Mechanisms on the Stock Returns of Listed Companies of Tehran Stock Exchange PDF

Author: Saeed Samimi

Publisher:

Published: 2017

Total Pages: 19

ISBN-13:

DOWNLOAD EBOOK →

Facilitating domestic and foreign investment and the expected stock returns of shareholders are issues that are typically important for all stakeholders of the company. The alignment of the interests of stakeholders and managers of companies can be achieved by reducing the problems of the agency. The decrease of these problems increases the shareholder's interest in trading on the capital markets and results in the increase of stock liquidity and expected return of shareholders. This study aims to explore some of the corporate governance mechanisms on the stock returns of listed companies in Tehran Stock Exchange. The explored governance mechanisms of the study included non-executive members of the board of directors, the duality of responsibility of the managing director, ownership of institutional shareholders, and audit quality. To this end, 93 companies were chosen through the systematic elimination from 2007 to 2014 which were analyzed using panel data regression analysis. The results of the study indicated that institutional ownership and auditor specialization in industry had an effect on the stock return. In addition, independence of the board of directors, managing director responsibilities and the size of audit institution had no effect on the stock return.

Lanterna Rally - Theme by Grace Themes