Does the quality of corporate governance affect firm valuation and risk? Evidence from a corporate governance scorecard in Hong Kong
Author(s)
Author(s)
Stouraitis, A
Tan, W.
Date Issued
2010
Publisher
John Wiley & Sons
Journal
International Review of Finance
Volume
10
Issue
4
Start page
403
End page
432
Abstract
Using Hong Kong firm data, we construct an index of corporate governance during 2002–2005, which scores the corporate governance practices of listed companies from the public shareholders' perspective based on the Organization for Economic Corporation and Development Principles of Corporate Governance. The findings show that family firms and firms with concentrated ownership structures are associated with bad corporate governance. The evidence also shows that these firms improve their corporate governance practices slower than their peers. Overall, the quality of corporate governance is very significant in explaining future company stock returns and risk. Good corporate governance is associated with both higher stock returns and with lower risk. Improvements in corporate governance are associated with significantly higher stock returns and lower company risk.
SFU Affiliated Publication
No
Availability at SFU Library
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