Bhattacharyya (2007) develops a model in which compensation contracts motivate high-quality managers to retain and invest firm earnings, while low-quality managers are motivated to distribute income to shareholders. In equilibrium, the model shows that there is a positive (negative) relationship...

Purpose – This paper aims to examine whether the corporate governance rankings published by a market information intermediary are reflected in the values that investors accord to firms. Design/methodology/approach – Panel data from 289 Canadian firms in the four‐year period 2002‐2005...