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

Author

Listed:
  • 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.

Suggested Citation

  • Bernard S. Black & Inessa Love & Andrei Rachinsky, 2005. "Corporate Governance and Firms' Market Values: Time Series Evidence from Russia," Working Papers w0053, Center for Economic and Financial Research (CEFIR).
  • Handle: RePEc:cfr:cefirw:w0053
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    File URL: http://www.cefir.ru/papers/WP53_new_En.pdf
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    References listed on IDEAS

    as
    1. Black, Bernard, 2001. "The corporate governance behavior and market value of Russian firms," Emerging Markets Review, Elsevier, vol. 2(2), pages 89-108, June.
    2. Art Durnev & E. Han Kim, 2005. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," Journal of Finance, American Finance Association, vol. 60(3), pages 1461-1493, June.
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    Citations

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    Cited by:

    1. 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.
    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. 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.
    4. Soloviev, Vladimir, 2009. "Экономико-Математическое Моделирование Рынка Программного Обеспечения: Монография. — М.: Вега-Инфо, 2009. — 176 С
      [Economic and mathematical modelling of software market]
      ," MPRA Paper 28974, University Library of Munich, Germany.
    5. Olga Lazareva & Andrei Rachinsky & Sergey Stepanov, 2007. "A Survey of Corporate Governance in Russia," Working Papers w0103, Center for Economic and Financial Research (CEFIR).
    6. Malik, Saif Ullah, 2012. "Relationship between Corporate Governance Score and Stock Prices: Evidence from KSE- 30 Index Companies," MPRA Paper 44475, University Library of Munich, Germany.
    7. 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).

    More about this item

    Keywords

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

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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