Is corporate governance relevant during the financial crisis?
Article
Article Title | Is corporate governance relevant during the financial crisis? |
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ERA Journal ID | 36027 |
Article Category | Article |
Authors | Gupta, Kartick (Author), Krishnamurti, Chandrasekhar (Author) and Tourani-Rad, Alireza (Author) |
Journal Title | Journal of International Financial Markets, Institutions and Money |
Journal Citation | 23 (1), pp. 85-110 |
Number of Pages | 26 |
Year | 2013 |
Place of Publication | Amsterdam, Netherlands |
ISSN | 1042-4431 |
1873-0612 | |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.intfin.2012.10.002 |
Abstract | We study the impact of internal corporate governance on performance during the current financial crisis for a comprehensive cross-country sample of 4046 publicly traded non-financial firms from the U.S. and 22 developed countries. Using a broad-based index of corporate governance quality, we find that well governed firms do not outperform poorly governed firms. We explore three potential explanations for the lack of significant impact of corporate governance quality on performance. First, we examine whether cross-country differences in institutional development have an impact on the effect of corporate governance on performance. Second, we investigate whether a narrowing down of the informationally efficient segment of the stock markets during the crisis can explain the results. We do not find support for either of these conjectures. Finally, we examine whether stock markets generally became less efficient in incorporating firm-specific information into stock prices during the crisis. Our empirical evidence is consistent with the latter view that during the crisis stock markets in developed countries became less efficient in incorporating firm-specific information into prices. |
Keywords | corporate governance; global financial crisis; stock return performance |
ANZSRC Field of Research 2020 | 350202. Finance |
350799. Strategy, management and organisational behaviour not elsewhere classified | |
350709. Organisation and management theory | |
Public Notes | © 2013 Elsevier Inc. Published version deposited in accordance with the copyright policy of the publisher. |
Byline Affiliations | Auckland University of Technology, New Zealand |
School of Accounting, Economics and Finance | |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q2476/is-corporate-governance-relevant-during-the-financial-crisis
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