Corporate Governance and Firms' Market Values: Time Series Evidence from Russia

There is increasing evidence that broad measures of firm-level corporate governance predict higher share prices. However, almost all prior work relies on cross-sectional data. This work leaves open the possibility that endogeneity or omitted firm-level variables explain the observed correlations. We address the second possibility by offering time-series evidence from Russia for 1999-present, exploiting a number of available governance indices. We find an economically important and statistically strong correlation between governance and market value in OLS with firm clusters and in firm random effects and firm fixed effects regressions. We also find significant differences in the predictive power of different indices, and in the components of these indices. How one measures governance matters.Russia, corporate governance, corporate governance index, law and finance, firm valuation, disclosure, emerging markets

Shareholder Passivity Reexamined

This article argues that shareholder monitoring is possible: It\u27s an idea that hasn\u27t been tried, rather than an idea that has failed. I defer to a second article currently in draft the question of whether more monitoring by institutional shareholders is desirable. Will direct shareholder oversight, or indirect oversight through shareholder-nominated directors, improve corporate performance, prove counterproductive, or, perhaps, not matter much one way or the other? What are the benefits and risks in giving money managers - themselves imperfectly monitored agents - more power over corporate managers? If more shareholder voice is desirable, how much more and for what issues? Which of the many relevant rules ought to be loosened, which tightened, and by how much, in light of the various purposes - often unrelated to shareholder voting - that those rules serve? For all of these questions, the answers may well be different for different institutions. This article proceeds as follows. Part II summarizes the views of the naysayers who invoke collective action problems to explain why shareholders will rarely do anything. Part III reviews the principal state and federal rules that affect, and mostly obstruct, shareholder activism. Part IV discusses recent developments in institutional stock ownership and voting behavior that make the passivity story obsolete. These developments include rapid growth in ownership by less-conflicted public pension funds and mutual funds, increasing shareholder activism with public funds as the most visible actors, and the formation of trade groups that can facilitate collective shareholder action. Part V presents a theoretical model of the incentives of shareholder proponents that sheds light on shareholder incentives to remain passive, and the importance of scale economies in reducing those incentives. Part VI models the incentives of nonproponent shareholders to become informed or remain rationally apathetic. Part VII addresses the importance of agenda control in determining substantive outcomes. Part VIII examines the incentives of the major types of institutional investors, and the conflicts of interest that they face. Part IX is a conclusion

Sensitivity to the Single Production of Vector-Like Quarks at an Upgraded Large Hadron Collider

In this note we consider the sensitivity of the Large Hadron Collider (LHC) to the single production of new heavy vector-like quarks. We consider a model with large mixing with the standard model top quark with electroweak production of single heavy top quarks. We consider center of mass energies of 14, 33, and 100 TeV with various pileup scenarios and present the expected sensitivity and exclusion limits

Can Corporate Governance Reforms Increase Firms\u27 Market Values: Evidence from India

A central problem in studying the valuation effects of corporate governance reforms is that most reforms affect all firms in a country. Thus, if share prices move when governance reforms are announced, the price changes may reflect the reforms, but could also reflect other new information. We address this identification issue by studying India’s adoption in 2000 of major governance reforms (Clause 49), a number of which resemble and predate Sarbanes Oxley. Clause 49 requires, among other things, audit committees, a minimum number of independent directors, and CEO/CFO certification of financial statements and internal controls. The reforms were sponsored by the Confederation of Indian Industry (an organization of large Indian public firms), applied initially to larger firms, and reached smaller public firms only after a several-year lag. The difference in effective dates offers a natural experiment: Large firms are the treatment group for the reforms. Small firms provide a control group for other news affecting India generally. If investors consider the reforms to be valuable (or more valuable for larger firms), large firms\u27 share prices should react positively to reform announcements, relative to small firms. The May 1999 announcement by Indian securities regulators of plans to adopt what became Clause 49 is accompanied by a roughly 4% increase in the price of large firms over a (0,+1) event window, relative to smaller public firms; the difference grows to 7% over a (0,+4) window. Mid-sized firms had an intermediate reaction