Governance and Equity Prices: Does Transparency Matter?*
This article examines how accounting transparency and corporate governance interact. Firms with better governance are associated with higher abnormal returns, but even more so if they also have higher transparency. The effect is largely monotonic--it is small and insignificant for opaque firms and large and significant for transparent firms--and survives numerous robustness tests. We find supportive evidence for firm value and operating performance. Hence, governance and transparency are complements. This complementarity effect is consistent with the view that more transparent firms are more likely takeover targets, because acquirers can bid more effectively and identify synergies more precisely. Copyright 2013, Oxford University Press.
Year of publication: |
2013
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Authors: | Gu, Lifeng ; Hackbarth, Dirk |
Published in: |
Review of Finance. - European Finance Association - EFA, ISSN 1572-3097. - Vol. 17.2013, 6, p. 1989-2033
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Publisher: |
European Finance Association - EFA |
Saved in:
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