The Vote is Cast: The Effect of Corporate Governance on Shareholder Value

Vicente Cuñat, Mireia Gine and Maria Guadalupe ()

No 16574, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: D21 G14 G34 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-cdm
Note: CF LS
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Citations: View citations in EconPapers (32)

Published as Vicente Cuñat & Mireia Gine & Maria Guadalupe, 2012. "The Vote Is Cast: The Effect of Corporate Governance on Shareholder Value," Journal of Finance, American Finance Association, vol. 67(5), pages 1943-1977, October.

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Journal Article: The Vote Is Cast: The Effect of Corporate Governance on Shareholder Value (2012)
Working Paper: The vote is cast: the effect of corporate governance on shareholder value (2010)
Working Paper: The Vote is cast: The effect of Corporate Governance on Shareholder Value (2010)
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