Corporate Governance and Firm Value: International Evidence

Item Type Journal paper
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.

Authors Ammann, Manuel; Oesch, David & Schmid, Markus
Journal or Publication Title Journal of Empirical Finance
Language English
Keywords Corporate Governance, Firm Valuation, Minimum Standards, Principal Component Analysis, Corporate Social Responsibility
Subjects business studies
HSG Classification contribution to scientific community
Refereed Yes
Date January 2011
Publisher Elsevier
Place of Publication Amsterdam
Volume 18
Number 1
Page Range 36-55
Number of Pages 20
ISSN 0927-5398
ISSN-Digital 1879-1727
Publisher DOI 10.1016/j.jempfin.2010.10.003
Depositing User Prof. Dr. Manuel Ammann
Date Deposited 27 Oct 2010 08:39
Last Modified 23 Aug 2016 11:09
URI: https://www.alexandria.unisg.ch/publications/69867

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Citation

Ammann, Manuel; Oesch, David & Schmid, Markus (2011) Corporate Governance and Firm Value: International Evidence. Journal of Empirical Finance, 18 (1). 36-55. ISSN 0927-5398

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https://www.alexandria.unisg.ch/id/eprint/69867
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