Corporate Governance and Equity Prices

  title={Corporate Governance and Equity Prices},
  author={Paul A. Gompers and Joy L. Ishii and Andrew Metrick},
  journal={Capital Markets eJournal},
Corporate-governance provisions related to takeover defenses and shareholder rights vary substantially across firms. In this paper, we use the incidence of 24 different provisions to build a 'Governance Index' for about 1,500 firms per year, and then we study the relationship between this index and several forward-looking performance measures during the 1990s. We find a striking relationship between corporate governance and stock returns. An investment strategy that bought the firms in the… Expand
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  • 2012
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