The Vote is Cast: The Effect of Corporate Governance on Shareholder Value / Vicente Cuñat, Mireia Gine, Maria Guadalupe.

Format:

Book

Author/Creator:

Cuñat, Vicente.

Contributor:

National Bureau of Economic Research.

Gine, Mireia.

Guadalupe, Maria.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16574.

NBER working paper series no. w16574

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Vote is Cast

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

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.

Notes:

Print version record

December 2010.