We thank Yakov Amihud, Manuel Berger, Wolfgang Bessler, John Doukas (the editor), Filippo Ippolito, Colin Mayer, Tarun Ramadorai, Regina Riphan, Frank Schmid, Nico Waldmeier, Gabrielle Wanzenried, David Yermack, and an anonymous referee as well as participants in seminars at the University of Oxford, the University of St. Gallen, and the University of Frankfurt for helpful comments. We also thank Max Schmid for his large contribution to the collection of compensation and shareholding data from the annual reports. Financial support from the National Center of Competence in Research ‘Financial Valuation and Risk Management’(NCCR FINRISK) is gratefully acknowledged. The NCCR FINRISK is a research programme supported by the Swiss National Science Foundation. Parts of this research were undertaken while Beiner was a visiting scholar at the Saïd Business School at the University of Oxford; he acknowledges financial support from the Swiss National Science Foundation (SNF). All remaining errors are our own.
An Integrated Framework of Corporate Governance and Firm Valuation
Version of Record online: 13 FEB 2006
European Financial Management
Volume 12, Issue 2, pages 249–283, March 2006
How to Cite
Beiner, S., Drobetz, W., Schmid, M. M. and Zimmermann, H. (2006), An Integrated Framework of Corporate Governance and Firm Valuation. European Financial Management, 12: 249–283. doi: 10.1111/j.1354-7798.2006.00318.x
- Issue online: 13 FEB 2006
- Version of Record online: 13 FEB 2006
- corporate governance;
- principal-agent problems;
- ownership structure;
- firm valuation;
Recent empirical research shows evidence of a positive relationship between the quality of firm-specific corporate governance and firm valuation. Instead of looking at one single corporate governance mechanism in isolation, we construct a broad corporate governance index and apply five additional variables related to ownership structure, board characteristics, and leverage to provide a comprehensive description of firm-level corporate governance for a representative sample of Swiss firms. To control for potential endogeneity of these six governance mechanisms, we develop a system of simultaneous equations and apply three-stage least squares (3SLS). Our results support the widespread hypothesis of a positive relationship between corporate governance and firm valuation.