Cookies?
Library Header Image
LSE Research Online LSE Library Services

The vote is cast: the effect of corporate governance on shareholder value

Cuñat, Vicente ORCID: 0000-0001-7504-2801, Giné, Mireia and Guadalupe, Maria (2010) The vote is cast: the effect of corporate governance on shareholder value. Financial Markets Group Discussion Papers (663). Financial Markets Group, The London School of Economics and Political Science, London, UK.

[img] Text (DP663) - Published Version
Download (1MB)

Abstract

This paper estimates the effect of corporate governance provisions on shareholder value and long-term outcomes in S&P1500 firms. We apply a regression discontinuity design to shareholder votes on governance proposals in annual meetings. A close-call vote around the majority threshold is akin to a random outcome, allowing us to deal with prior expectations and the endogeneity of internal governance rules. Passing a corporate governance provision generates a 1.3% abnormal return on the day of the vote with an implied market value per provision of 2.8%. We also find evidence of changes in investment behavior and long-term performance improvements.

Item Type: Monograph (Discussion Paper)
Official URL: https://www.fmg.ac.uk/
Additional Information: © 2010 The Authors
Divisions: Financial Markets Group
Finance
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies
Date Deposited: 29 Jun 2023 23:03
Last Modified: 16 Sep 2023 00:02
URI: http://eprints.lse.ac.uk/id/eprint/119079

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics