Does Corporate Governance Really Matter?
نویسندگان
چکیده
We examine the relation between a broad set of corporate governance factors and various measures of managerial behavior and organizational performance. Using a sample of 2,126 firms we distill 38 structural measures of corporate governance (e.g., board characteristics, stock ownership, anti-takeover variables etc.) to 13 governance factors using principal components analysis. For a wide set of dependent variables (e.g., abnormal accruals, excessive CEO compensation, debt ratings, analyst recommendations, Q and over-investment) we find that the 13 governance factors on average explain only 1% to 5.5% of the cross-sectional variation using standard OLS multiple regression techniques and 1.4% to 9.1% of the variation using exploratory recursive partitioning techniques. Overall, our results suggest that the typical structural indicators of corporate governance used in academic research and institutional rating services have very limited ability to explain managerial behavior and organizational performance. Does Corporate Governance Really Matter?
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