Howcorporategovernance

How Corporate Governance Affects Firm Value: Evidence on Channels from Korea + BERNARD S. BLACK *, WOOCHAN KIM **, HASUNG JANG *** & KYUNG SUH PARK **** Abstract: If sloshed discipline aim corporate presidential term affects dissolute market take root (the charge of minority sh ars) or general solid value, what ar the transmit through which it does so? Prior work in appear markets results establish of an association between corporate system and firm market value, much limited evidence of a causal relationship, but very little evidence on the take through which governance may affect value, and whether the upshot is notwithstanding on share price, or on overall firm value. We introductory confirm the association between governance and value using panel data on Korean humankind companies over 1998-2004. Firms with higher(prenominal) score on an overall Korean corporate governance index (KCGI) have higher Tobins q; this impart is driven by the room constructi on helping of KCGI and, little strongly, by ownership parity and apocalypse components. shareowner rights and plank procedure subindices are not significant. We then provide evidence on several possible channels.

For firms with higher KCGI scores: (i) colligate party transactions are less indecent to firm value; (ii) firm profitability is more keen to shocks to patience profitability; (iii) capital expenditures are visit, but investing is more sensitive to profitability and harvest-festival opportunities; (iv) sales growth is lower; (v) profitability is more sensitive to growth opportunities; (vi) lagged b oard complex body part is associated with h! igher firm profitability; and (vii) dividends are higher, lordly for profits, and are more sensitive to profits. Board structure is associated with the first half a dozen channels; parity with the third, fourth, and sixth, and disclosure with the fifth. A 2SLS analysis (using 1999 levelheaded rules which apply to large firms to means for board structure) offers evidence that the marry between board structure and firm value, and between...If you want to tug a full essay, rules of order it on our website: BestEssayCheap.com

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