Investor-Driven Governance Standards and Firm Value

62 Pages Posted: 8 Jun 2020

See all articles by Yonca Ertimur

Yonca Ertimur

University of Colorado at Boulder - Department of Accounting

Paige Harrington Patrick

University of Illinois at Chicago - Department of Accounting

Date Written: May 12, 2020

Abstract

We ope-rationalize a corporate governance framework developed and promoted by a diverse, influential group of diverse institutional investors. We find positive associations between consistency with the proposed framework and firm value for smaller firms in recent years, and negative associations for S&P 500 firms in recent years. We detect some evidence of improved monitoring outcomes for firms whose governance provisions are more consistent with provisions eventually included in the framework. However, we do not find that measures of consistency with the framework are more strongly associated with firm outcomes than the much simpler entrenchment index is.

Keywords: Institutional Investors, Corporate Governance, Monitoring

JEL Classification: G30, G34

Suggested Citation

Ertimur, Yonca and Patrick, Paige Harrington, Investor-Driven Governance Standards and Firm Value (May 12, 2020). Available at SSRN: https://ssrn.com/abstract=3599479 or http://dx.doi.org/10.2139/ssrn.3599479

Yonca Ertimur (Contact Author)

University of Colorado at Boulder - Department of Accounting ( email )

419 UCB
Boulder, CO 80309-0419
United States

Paige Harrington Patrick

University of Illinois at Chicago - Department of Accounting ( email )

601 South Morgan Street
University Hall, Room 2303
Chicago, IL 60607
United States

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