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

Cuñat, Vicente, 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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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:
Additional Information: © 2010 The National Bureau of Economic Research
Divisions: Finance
Financial Markets Group
Subjects: H Social Sciences > HG Finance
JEL classification: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis
G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Date Deposited: 09 Aug 2011 15:57
Last Modified: 20 Nov 2020 00:06

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