We would like to thank the editor (Bonnie Van Ness) as well as the reviewers for helpful comments.
The Corporate Governance Premium, Returns, and Mutual Funds
Version of Record online: 9 APR 2012
© 2012, The Eastern Finance Association
Volume 47, Issue 2, pages 299–326, May 2012
How to Cite
Chou, J. and Hardin III, W. G. (2012), The Corporate Governance Premium, Returns, and Mutual Funds. Financial Review, 47: 299–326. doi: 10.1111/j.1540-6288.2012.00330.x
- Issue online: 9 APR 2012
- Version of Record online: 9 APR 2012
- corporate governance;
- mutual funds
Mutual funds with a preference for strong corporate governance (CG) have performance similar to mutual funds with a preference for weak CG. We find a direct relation between overall mutual fund CG preference and the corporate governance premium (CGP). Furthermore, the investment preferences of mutual funds forecast the change in the CGP. We provide evidence that the investment activities of institutional investors can affect stock performance, and that shifts by institutional investors in CG preference impact the appearance of the CGP.