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Title: Corporate governance and firm performance: Evidence from the U.K. using a corporate governance scorecard
Authors: LUO LEI
Keywords: corporate governance, firm performance, U.K., governance change; cost of capital, free cash flow
Issue Date: 28-May-2007
Citation: LUO LEI (2007-05-28). Corporate governance and firm performance: Evidence from the U.K. using a corporate governance scorecard. ScholarBank@NUS Repository.
Abstract: In this thesis, I examine three corporate governance related issues, namely, the determinants of corporate governance, the relationship between corporate governance and firm performance, and the impact of corporate governance on stock returns.I find that governance change is driven by change in firm characteristics. More interestingly, it is the change in corporate governance rather than the level of corporate governance that determines performance. I find that both free cash flow and cost of equity capital help to explain the positive association between Tobina??s Q and improvements in corporate governance. An investment strategy that buys governance-improving firms and shorts governance-deteriorating firms is found to earn an average monthly return of 72 basis points, or about 8.6% per year. Tests to establish whether the abnormal returns accruing to the improvement portfolio is due to mispricing or risk are inconclusive.
Appears in Collections:Ph.D Theses (Open)

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