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External corporate governance and performance: evidence from the Nordic countries

Author

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  • Seppo Ikaheimo
  • Vesa Puttonen
  • Tuomas Ratilainen

Abstract

We examine the influence of anti-takeover provisions on valuation, stock return and operating performance using data from an extensive sample of publicly listed Nordic companies during the time period of 1999-2004 (similar to Gompers, Ishii, and Metrick 2003 [Corporate governance and equity prices. The Quarterly Journal of Economics 118: 107-55] in the US). We collected data from nine of the most commonly used provisions. The results suggest that anti-takeover provisions have a negative impact on valuation, no effect on stock return, and a positive influence on operating performance. Analysing the influence of each reveals dual-class stock to be the single most important provision dummy contributing to the negative valuation, though the discount decreases over the years.

Suggested Citation

  • Seppo Ikaheimo & Vesa Puttonen & Tuomas Ratilainen, 2011. "External corporate governance and performance: evidence from the Nordic countries," The European Journal of Finance, Taylor & Francis Journals, vol. 17(5-6), pages 427-450.
    • Handle: RePEc:taf:eurjfi:v:17:y:2011:i:5-6:p:427-450
    DOI: 10.1080/1351847X.2010.543832
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    Cited by:

    1. Alves, Paulo & Couto, Eduardo Barbosa & Francisco, Paulo Morais, 2016. "Executive pay and performance in Portuguese listed companies," Research in International Business and Finance, Elsevier, vol. 37(C), pages 184-195.
    2. Janis Berzins & Øyvind Bøhren & Bogdan Stacescu, 2018. "Shareholder Conflicts and Dividends [A theory of dividends based on tax clienteles]," Review of Finance, European Finance Association, vol. 22(5), pages 1807-1840.
    3. Yumei Feng & Haozhi Huang & Congcong Wang & Qian Xie, 2021. "Effects of anti‐takeover provisions on the corporate cost of debt: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4119-4145, September.

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