Relationship between Corporate Governance Score and Stock Prices: Evidence from KSE- 30 Index Companies
International Journal of Business and Social Science, Vol. 3, No. 4, 2012
11 Pages Posted: 24 Jan 2012
Date Written: January 23, 2012
The price of stock like any other commodity goes up and down due to a number of factors. Corporate governance is one of important determinants of stock price. This paper makes an attempt to study exclusively the relationship between corporate governance score and stock prices of a company. The research involves a study of the KSE - 30 index companies. The independent variable (Corporate governance score) and dependent vari abl e (company’s share price) have identified for the two years 2009 and 2010. In the analysis our hypothesis corporate governance score and stock prices is significant. Hence, this study concludes that better governed firms have higher stock prices and vice versa. This is due to the fact that better managed firms will perform better and as result stock prices will increase.
Keywords: Corporate governance, Stock Prices, Board Independence, Expertise of Audit committee, Remuneration Committee, Nomination Committee, CEO Duality, Existence of Audit committee
JEL Classification: G34, E30
Suggested Citation: Suggested Citation