MARC Record from Library of Congress

LEADER: 02982nam a22003257a 4500
001 2010655612
003 DLC
005 20100624141931.0
007 cr |||||||||||
008 100624s2010 mau sb 000 0 eng
010 $a 2010655612
040 $aDLC$cDLC
050 00 $aK487.E3
100 1 $aBebchuk, Lucian A.
245 10 $aLearning and the disappearing association between governance and returns$h[electronic resource] /$cLucian A. Bebchuk, Alma Cohen, and Charles C. Y. Wang.
260 $aCambridge, MA :$bHarvard Law School,$c[2010]
490 1 $aDiscussion paper,$x1045-6333;$vno. 667
500 $aTitle from PDF file as viewed on 6/24/2010.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"Abstract: In an important and influential work, Gompers, Ishii, and Metrick (2003) show that a trading strategy based on an index of 24 governance provisions (G-Index) would have earned abnormal returns during the 1991-1999 period, and this intriguing finding has attracted much attention ever since it was reported. We show that the G-Index (as well as the E-Index based on a subset of the six provisions that matter the most) was no longer associated with abnormal returns during the period of 2000-2008, or any sub-periods within it, and we provide evidence consistent with the hypothesis that the disappearance of the governance-returns association was due to market participants' learning to appreciate the difference between firms scoring well and poorly on the governance indices. Consistent with the learning hypothesis, we document that (i) attention to corporate governance from the media, institutional investors, and researchers has exploded in the beginning of the 2000s and remained on a high level since then, and (ii) until the beginning of the 2000s, but not subsequently, market participants were more positively surprised by the earning announcements of good-governance firms than by those of poor-governance firms. Our results are robust to excluding new economy firms or to focusing solely on firms in non-competitive industries. While the G and E indices could no longer generate abnormal returns in the 2000s, their negative association with Tobin's Q persists and they thus remain valuable tools for researchers, policymakers, and investors"--John M. Olin Center for Law, Economics, and Business web site.
538 $aSystem requirements: Adobe Acrobat Reader.
650 0 $aCorporate governance$xLaw and legislation.
650 0 $aRate of return.
650 0 $aCorporate governance$xEconometric models.
700 1 $aCohen, Alma.
700 1 $aYang, Charles C. Y.
710 2 $aJohn M. Olin Center for Law, Economics, and Business.
830 0 $aDiscussion paper (John M. Olin Center for Law, Economics, and Business : Online) ;$vno. 667.
856 40 $zView the PDF version of the paper at the School's website$uhttp://www.law.harvard.edu/programs/olin%5Fcenter/papers/667%5FBebchuk.php