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

Cuñat, Vicente and Gine, Mireia and Guadalupe, Maria (2010) The vote is cast: the effect of corporate governance on shareholder value. NBER working paper, 16574. The National Bureau of Economic Research, Cambridge, MA, USA.

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Identification Number: 16574

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 (Working Paper)
Official URL: http://www.nber.org/
Additional Information: © 2010 The National Bureau of Economic Research
Subjects: H Social Sciences > HG Finance
Sets: Research centres and groups > Managerial Economics and Strategy Group
Departments > Finance
Departments > Management
Collections > Economists Online
Research centres and groups > Financial Markets Group (FMG)
Collections > LSE Financial Markets Group (FMG) Working Papers
Date Deposited: 09 Aug 2011 15:57
Last Modified: 27 Feb 2014 15:35
URI: http://eprints.lse.ac.uk/id/eprint/37793

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