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Corporate governance and value: evidence from “close calls” on shareholder governance proposals

Cuñat, Vicente ORCID: 0000-0001-7504-2801, Gine, Mireia and Guadalupe, Maria (2013) Corporate governance and value: evidence from “close calls” on shareholder governance proposals. Journal of Applied Corporate Finance, 25 (1). pp. 44-54. ISSN 1078-1196

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Identification Number: 10.1111/j.1745-6622.2013.12005.x


The authors summarize the findings of their recent study of the effects of specific corporate governance provisions on firm value. Using a sample of governance provisions that were subjected to shareholder votes during the period 1997–2011, this study analyzes cases in which shareholder-sponsored corporate governance proposals were either rejected or passed by a small margin (no more than 5% of the vote). By so doing, this study helps correct two limitations of the existing governance literature: (1) that the effects of expected governance changes are already incorporated in share prices (the “expectations” problem); and (2) that governance policies are often a consequence rather than a cause of other variables such as corporate performance and are thus correlated with many other firm characteristics (the “endogeneity” problem). The authors' findings show that expected improvements in corporate governance through the adoption of particular corporate governance provisions—particularly the removal of anti-takeover provisions—is associated with both positive abnormal stock returns and improvements in long-term firm operating performance. The authors estimate that the adoption of such governance proposals increases shareholder value by 2.6%, on average. Moreover, these returns are consistent with, and thus accurate predictors of, future changes in corporate investment (reductions of capital spending, in most cases) and improvements in operating performance.

Item Type: Article
Official URL:
Additional Information: © 2013 Morgan Stanley
Divisions: Finance
Financial Markets Group
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HG Finance
Date Deposited: 31 Mar 2015 16:10
Last Modified: 16 May 2024 01:45

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