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Corporate Governance and its Effect on Firm Value and Stock Returns of Listed Companies on the Athens Stock Exchange

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  • Kanellos Toudas
  • Athanasios Bellas

Abstract

Recent researches have worked on the relationship between Corporate Governance and expected rates on return as well as historical returns. Firstly, we construct an Index of Corporate Governance (CGQL) that measures the quality implementation of Corporate Governance of the enlisted firms on the Athens Stock Exchange distinguishing the firms into Democracies and Dictatorships. An investment strategy that buys Democracies and shorts Dictatorships earns abnormal returns of around 18% annually during the sample period. In this paper we investigate if Corporate Governance matters in investors’ decisions. We try to observe if Corporate Governance is a proxy for firm valuation, a factor of creating and altering abnormal returns, or a risk factor, which can be a “substitute†for market risk (beta), using uni- and multi-variate analyses. The conclusions call into question the utility of Corporate Governance upon firm attractiveness.

Suggested Citation

  • Kanellos Toudas & Athanasios Bellas, 2014. "Corporate Governance and its Effect on Firm Value and Stock Returns of Listed Companies on the Athens Stock Exchange," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 58-80.
    • Handle: RePEc:ers:journl:v:xvii:y:2014:i:2:p:58-80
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    3. Galina Alekseevna Bunich & Elina Ildarovna Abdyukova & Anna Aleksandrovna Sysoeva & Vladimir Sergeevich Akopov, 2017. "Bank Factoring: Russian and International Practice," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 334-349.
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    5. Leo Vashkor Dewri, 2022. "A Critical Assessment of Interrelationship Among Corporate Governance, Financial Performance, Refined Economic Value Added to Measure Firm Value and Return on Stock," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2718-2759, December.
    6. Waluyo Waluyo, 2017. "Firm Size, Firm Age, and Firm Growth on Corporate Social Responsibility in Indonesia: The Case of Real Estate Companies," European Research Studies Journal, European Research Studies Journal, vol. 0(4A), pages 360-369.
    7. Peter J. Baldacchino & Chantelle Camilleri & Simon Grima & Frank H. Bezzina, 2017. "Assessing Incentive and Monitoring Schemes in the Corporate Governance of Maltese Co-operatives," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 177-195.

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