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Corporate Governance and Firms' Market Values: Time Series Evidence from Russia

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Author Info

  • Bernard S. Black

    ()
    (University of Texas at Austin)

  • Inessa Love

    ()
    (The World Bank)

  • Andrei Rachinsky

    ()
    (New Economic School/CEFIR)

Abstract

There is increasing evidence that broad measures of firm-level corporate governance predict higher share prices. However, almost all prior work relies on cross-sectional data. This work leaves open the possibility that endogeneity or omitted firm-level variables explain the observed correlations. We address the second possibility by offering time-series evidence from Russia for 1999-present, exploiting a number of available governance indices. We find an economically important and statistically strong correlation between governance and market value in OLS with firm clusters and in firm random effects and firm fixed effects regressions. We also find significant differences in the predictive power of different indices, and in the components of these indices. How one measures governance matters.

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Bibliographic Info

Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0053.

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Length: 40 pages
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:cfr:cefirw:w0053

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Related research

Keywords: Russia; corporate governance; corporate governance index; law and finance; firm valuation; disclosure; emerging markets;

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References

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  1. Durnev, Art & Kim, E. Han, 2004. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," CEI Working Paper Series 2004-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  2. Black, Bernard, 2001. "The corporate governance behavior and market value of Russian firms," Emerging Markets Review, Elsevier, vol. 2(2), pages 89-108, June.
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Cited by:
  1. Soloviev, Vladimir, 2009. "Экономико-Математическое Моделирование Рынка Программного Обеспечения: Монография. — М.: Вега-Инфо, 2009. — 176 �," MPRA Paper 28974, University Library of Munich, Germany.
  2. Mihails Kuznecovs & Sarmistha Pal, 2011. "Does Corporate Governance Reform Necessarily Boost Firm Performance? Recent Evidence from Russia," CEDI Discussion Paper Series 11-06, Centre for Economic Development and Institutions(CEDI), Brunel University.
  3. Marco Wölfle, 2009. "Information-based trade in Russia and the effects of listing abroad," Economic Change and Restructuring, Springer, vol. 42(4), pages 229-262, November.
  4. Goriaev, Alexei & Zabotkin, Alexei, 2006. "Risks of investing in the Russian stock market: Lessons of the first decade," Emerging Markets Review, Elsevier, vol. 7(4), pages 380-397, December.
  5. Olga Lazareva & Andrei Rachinsky & Sergey Stepanov, 2008. "Corporate Governance, Ownership Structures and Investment in Transition Economies: the Case of Russia, Ukraine and Kyrgyzstan," Working Papers w0119, Center for Economic and Financial Research (CEFIR).
  6. Olga Lazareva & Andrei Rachinsky & Sergey Stepanov, 2007. "A Survey of Corporate Governance in Russia," Working Papers w0103, Center for Economic and Financial Research (CEFIR).

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