The relation between the corporate governance evaluation and abnormal returns: the role of company financial performance

Yi-Hui Tai

Asia-Pacific Journal of Accounting & Economics, 2023, vol. 30, issue 4, 1086-1103

Abstract: This research investigates the association between the upgrade/downgrade of rankings in corporate governance evaluation exercises and stock price reactions. Using Taiwan equities as the research setting, this study finds that firms receiving an upgraded (downgraded) ranking from corporate governance evaluation exercises do not experience significantly positive (negative) abnormal returns, but there is actually a positive (negative) correlation between such an upgrade (downgrade) after these evaluation exercises as well as abnormal returns under the condition of better company financial performance. This study contributes to the extant literature by shedding additional light on the correlation among corporate governance evaluation exercises, abnormal returns, and company financial performance.

Date: 2023
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DOI: 10.1080/16081625.2020.1828952

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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