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Corporate governance analysts and firm value: Australian evidence

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  • Huang, Peng
  • Lu, Yue
  • Wee, Marvin

Abstract

This paper replicates the UK findings in Lehmann (2019) and examines the value implication of corporate governance analysts in the Australian setting. Theoretically, corporate governance analysts create firm value via monitoring the management, enhancing information production and dissemination, and increasing investor recognition. However, we do not find this effect in Australia. Using an exogenous increase in coverage by corporate governance analysts, we find that unlike the case with UK firms, corporate governance analysts do not have any significant effect on firm value in Australia. Different sample compositions, macroeconomic conditions, and institutional settings might be the possible reasons for our insignificant results.

Suggested Citation

  • Huang, Peng & Lu, Yue & Wee, Marvin, 2020. "Corporate governance analysts and firm value: Australian evidence," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:pacfin:v:63:y:2020:i:c:s0927538x20304315
    DOI: 10.1016/j.pacfin.2020.101430
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    References listed on IDEAS

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    1. Reena Aggarwal & Isil Erel & René Stulz & Rohan Williamson, 2010. "Differences in Governance Practices between U.S. and Foreign Firms: Measurement, Causes, and Consequences," The Review of Financial Studies, Society for Financial Studies, vol. 23(3), pages 3131-3169, March.
    2. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance and Equity Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 107-156.
    3. Daines, Robert M. & Gow, Ian D. & Larcker, David F., 2010. "Rating the ratings: How good are commercial governance ratings?," Journal of Financial Economics, Elsevier, vol. 98(3), pages 439-461, December.
    4. Nico Lehmann, 2019. "Do Corporate Governance Analysts Matter? Evidence from the Expansion of Governance Analyst Coverage," Journal of Accounting Research, Wiley Blackwell, vol. 57(3), pages 721-761, June.
    5. Aggarwal, Reena & Erel, Isil & Ferreira, Miguel & Matos, Pedro, 2011. "Does governance travel around the world? Evidence from institutional investors," Journal of Financial Economics, Elsevier, vol. 100(1), pages 154-181, April.
    6. Mine Ertugrul & Shantaram Hegde, 2009. "Corporate Governance Ratings and Firm Performance," Financial Management, Financial Management Association International, vol. 38(1), pages 139-160, March.
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