|
|
|
|
||||
|
||||
Governance Indices and Valuation Multiples: Which Causes Which?Kenneth LehnUniversity of Pittsburgh - Finance Group Sukesh PatroNorthern Illinois University Mengxin ZhaoUniversity of Alberta - School of Business; University of Alberta - Department of Finance and Statistical Analysis; University of Alberta May 1, 2007 Journal of Corporate Finance, Vol. 13, 2007 Abstract: Two recent papers document a significant relation between valuation multiples and governance indices during the 1990s. We test whether causation runs from governance to valuation or vice versa. We find that valuation multiples during the early 1980s, a period preceding the adoption of the provisions comprising the governance indices, are highly correlated with valuation multiples during the 1990s. After controlling for valuation multiples during 1980–1985, no significant relation exists between contemporaneous valuation multiples and governance indices during the 1990s. The results are consistent with the hypothesis that firms with low valuation multiples were more likely to adopt provisions comprising the governance indices, not that the adoption of these provisions depresses valuation multiples.
Number of Pages in PDF File: 32 Keywords: Governance, governance index, causality JEL Classification: G30, G34 Accepted Paper SeriesDate posted: October 2, 2005 ; Last revised: January 27, 2013Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo6 in 0.344 seconds
