• DOI:10.1111/J.1540-6261.2006.00851.X
Corpus ID: 3292420

Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Investors' Expectations

@article{Core2004DoesWG,
  title={Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Investors' Expectations},
  author={J. Core and W. Guay and T. Rusticus},
  journal={Journal of Finance},
  year={2004},
  volume={61},
  pages={655-687}
}

J. Core, W. Guay, T. Rusticus

Published 2004

Economics, Business

Journal of Finance

We investigate Gompers, Ishii, and Metrick's (2003) finding that firms with weak shareholder rights exhibit significant stock market underperformance. If the relation between poor governance and poor returns is causal, we expect that the market is negatively surprised by the poor operating performance of weak governance firms. We find that firms with weak shareholder rights exhibit significant operating underperformance. However, analysts' forecast errors and earnings announcement returns show… CONTINUE READING

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