Corporate Governance and Its Impact on Equity Performance

Abstract

Corporate governance is a complex and multifaceted subject. Furthermore, governance data are hard to collect and measure on a large scale. The classic approach to examine governance issues relies generally on the existence of allegedly good governance programs. In contrast to this approach, the authors use granular quantitative measures to assess the difficult-to-interpret aggregated governance framework with the aim to explore the relationship between corporate governance and equity performance. By digging into this dataset, they were able to establish a profile of effective and good corporate governance quantitatively, with a range of board characteristics, chief executive officer compensation, and shareholder voting rights from the point of view of investors.