Research on Corporate Governance Premium Based on Simultaneous Equations: How to Test the Validity of Any Corporate Governance Indez
Researching on corporate governance premium which involves mechanism of interaction between corporate governance and firm market value, not only contributes to deepen the theory of corporate governance and point in the direction of optimizing the corporate governance for listed companies, but also helps investors to assess firm market value comprehensively. It is very important to test the validity of any corporate governance index which will be applied in the study of corporate governance premium. According to the SSE Corporate Governance Sector, judgment methods for corporate governance index are constructed, including discreteness method and continuity method. Corporate governance efficiency score (an index) is tested by the judgment methods and this indicator is valid. Using the corporate governance efficiency score, we develop a system of simultaneous equations, where the corporate governance is allowed to affect firm market value, while at the same time firm market value is also allowed to affect the corporate governance. The results support the widespread hypothesis of a positive relationship between corporate governance and firm market value. An increase in our corporate governance efficiency score by 0.1 point (where the index ranges from 0 to 1) causes an increase of the market value by roughly 37.2％. We also report a number of other interesting results on the relationship among different variables.
Simultaneous Equations Corporate Governance Premium Validity Test
LIU Shiyu WANG Fusheng
School of Economics and Management, Harbin Institute of Technology, P.R.China, 150001
国际会议
The 5th International Sympsium for Corporate Governance(第五届公司治理国际研讨会)
天津
英文
1323-1331
2009-09-01（万方平台首次上网日期，不代表论文的发表时间）