Abstract

http://ssrn.com/abstract=620822
 
 

References (40)



 
 

Citations (75)



 


 



Corporate Governance, Idiosyncratic Risk, and Information Flow


Miguel A. Ferreira


Nova School of Business and Economics; European Corporate Governance Institute (ECGI)

Paul A. Laux


University of Delaware - Alfred Lerner College of Business and Economics

December 2005

AFA 2006 Boston Meetings Paper

Abstract:     
We study the relationship of corporate governance policy and idiosyncratic risk in stock returns. Firms with fewer anti-takeover provisions display higher levels of idiosyncratic risk, trading activity, private information flow, and more information about future earnings in stock prices. Trading interest by institutions, especially those active in merger arbitrage, strengthens the relationship of governance to idiosyncratic risk. Our results indicate that openness to the market for corporate control leads to more informative stock prices by encouraging collection of and trading on private information. Consistent with an information-flow interpretation, the component of volatility unrelated to governance is associated with the efficiency of corporate investment.

Number of Pages in PDF File: 50

Keywords: Corporate governance, Takeovers, Idiosyncratic risk, Institutional investors, Capital budgeting

JEL Classification: F3, G1, O4

working papers series


Download This Paper

Date posted: November 18, 2004  

Suggested Citation

Ferreira, Miguel A. and Laux, Paul A., Corporate Governance, Idiosyncratic Risk, and Information Flow (December 2005). AFA 2006 Boston Meetings Paper. Available at SSRN: http://ssrn.com/abstract=620822 or http://dx.doi.org/10.2139/ssrn.620822

Contact Information

Miguel Almeida Ferreira (Contact Author)
Nova School of Business and Economics ( email )
Campus de Campolide
Lisbon, 1099-032
Portugal
European Corporate Governance Institute (ECGI) ( email )
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Paul A. Laux
University of Delaware - Alfred Lerner College of Business and Economics ( email )
Office 306 Purnell Hall
Newark, DE 19716
United States
302-831-6598 (Phone)
302-831-3061 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 4,104
Downloads: 887
Download Rank: 13,289
References:  40
Citations:  75

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 1.016 seconds