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Abstract

Employing a unique data set provided by Governance Metrics International, which rates firms using six different corporate governance dimensions, we analyze whether Japanese firms with many governance provisions have a better corporate performance than firms with few governance provisions. Employing an overall index, we find that well-governed firms significantly outperform poorly governed firms by up to 15% a year. Using indices for various governance categories, we find that not all categories affect corporate performance. Governance provisions that deal with financial disclosure, shareholder rights, and remuneration do affect stock price performance. The impact of provisions that deal with board accountability, market for control, and corporate behavior is limited.

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Bibliographic Info

Article provided by Elsevier in its journal Pacific-Basin Finance Journal.

Volume (Year): 16 (2008)
Issue (Month): 3 (June)
Pages: 236-251

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Handle: RePEc:eee:pacfin:v:16:y:2008:i:3:p:236-251

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Web page: http://www.elsevier.com/locate/pacfin

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Find related papers by JEL classification:

• C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
• C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
• G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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Cited by:

1. Alexander Bassen & Stefan Prigge & Christine Zöllner, 2008. "Behind Broad Corporate Governance Aggregates: A First Look at Single Provisions of the German Corporate Governance Code," Working Papers 010, Hanseatic University, Germany, Department of Economics.
2. Lee, Shih-Cheng & Lin, Chien-Ting & Chang, Pei-Ting, 2011. "An Ohlson valuation framework for valuing corporate governance: The case of Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 19(4), pages 420-434, September.
3. Trabelsi, Mohamed Ali, 2009. "Governance and performance of Tunisian banks," MPRA Paper 26657, University Library of Munich, Germany, revised 2009.
4. Yves Bozec & Richard Bozec & Mohamed Dia, 2010. "Overall governance, firm value and deviation from one share: one vote principle," International Journal of Managerial Finance, Emerald Group Publishing, vol. 6(4), pages 305-328, September.

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