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Corporate Governance and Information Efficiency in Security Markets


  • We thank an anonymous referee, David Hillier and John Doukas, the Editor, for very helpful suggestions, as well as participants at the European Financial Managenent (EFM) Corporate Governance Symposium held at Leeds in the spring of 2005. The usual disclaimer applies. Correspondence: Kevin Keasey.


This paper investigates a neglected topic in corporate governance research; namely, do governance characteristics affect the market reaction to news? The topic is important given the emphasis by governance regulations and codes of best practice on the need for greater transparency of corporate activities. For the first time in the corporate governance literature, we show that corporate governance characteristics (particularly the presence of founding family directors and gender diverse boards) affect the market reaction to company specific news. The results of the paper point to the analysis of the impact of governance characteristics on the market reaction to news being a new and complementary research agenda within corporate governance.