Is corporate governance relevant during the financial crisis?

Gupta, Kartick and Krishnamurti, Chandrasekhar and Tourani-Rad, Alireza (2013) Is corporate governance relevant during the financial crisis? Journal of International Financial Markets, Institutions and Money, 23 (1). pp. 85-110. ISSN 1042-4431

Abstract

We study the impact of internal corporate governance on performance during the current financial crisis for a comprehensive cross-country sample of 4046 publicly traded non-financial firms from the U.S. and 22 developed countries. Using a broad-based index of corporate governance quality, we find that well governed firms do not outperform poorly governed firms. We explore three potential explanations for the lack of significant impact of corporate governance quality on performance. First, we examine whether cross-country differences in institutional development have an impact on the effect of corporate governance on performance. Second, we investigate whether a narrowing down of the informationally efficient segment of the stock markets during the crisis can explain the results. We do not find support for either of these conjectures. Finally, we examine whether stock markets generally became less efficient in incorporating firm-specific information into stock prices during the crisis. Our empirical evidence is consistent with the latter view that during the crisis stock markets in developed countries became less efficient in incorporating firm-specific information into prices.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: © 2013 Elsevier Inc. Published version deposited in accordance with the copyright policy of the publisher.
Faculty / Department / School: Historic - Faculty of Business and Law - School of Accounting, Economics and Finance
Date Deposited: 15 Mar 2014 11:11
Last Modified: 16 Jul 2014 04:39
Uncontrolled Keywords: corporate governance; global financial crisis; stock return performance
Fields of Research : 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150201 Finance
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150303 Corporate Governance and Stakeholder Engagement
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150310 Organisation and Management Theory
Socio-Economic Objective: E Expanding Knowledge > 97 Expanding Knowledge > 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
Identification Number or DOI: 10.1016/j.intfin.2012.10.002
URI: http://eprints.usq.edu.au/id/eprint/24797

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