EconPapers    
Economics at your fingertips  
 

The role of weighting in corporate governance ratings

Michail Nerantzidis ()
Additional contact information
Michail Nerantzidis: Hellenic Open University

Journal of Management & Governance, 2018, vol. 22, issue 3, 589-628

Abstract: Abstract This methodological paper highlights the differences and the resulting implications from the application of the three most commonly applied weighting index methods to measuring corporate governance quality at an aggregate level: the Dichotomous; the partial compliance (PC) unweighted; and the Experts’ methods. In particular, first, we demonstrate how each method is applied and provide the details needed for readers to replicate each method. Second, we employ these methods on a sample of companies and compare the corresponding scores by testing their differences statistically. Third, as an indicative example of the potential implications arising from the use of these measures, we test whether the relation between market value and corporate governance levels differs, depending on the method applied. We find that the three methods produce significantly different overall and relative (i.e., ranking order) scores and, consequently, the relation between market value and corporate governance levels differs, depending on the method applied. Thus, we contribute to the corporate governance literature by showing that weighting in corporate governance indices matters and we recommend simultaneous application of at least two methods (i.e., the PC unweighted and the Experts’ methods) for deriving robust findings.

Keywords: Corporate governance; Governance ratings; Governance indices; Firm value (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s10997-017-9393-5 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jmgtgv:v:22:y:2018:i:3:d:10.1007_s10997-017-9393-5

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/10997/PS2

Access Statistics for this article

Journal of Management & Governance is currently edited by Lino Cinquini

More articles in Journal of Management & Governance from Springer, Accademia Italiana di Economia Aziendale (AIDEA) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2019-05-15
Handle: RePEc:kap:jmgtgv:v:22:y:2018:i:3:d:10.1007_s10997-017-9393-5