We investigate the impact on firms of joining the S&P 500 index from 1997 to 2017. We find that the positive announcement effect on the stock price of index inclusion has disappeared and the long-run impact of index inclusion has...
Passive investors—ETFs and index funds—are the most important development in modern-day capital markets, dictating trillions of dollars in capital flows and increasingly owning much of corporate America. Neither the business...
After decades of de-prioritizing shareholders' economic interests and low corporate profitability, Japan introduced the JPX-Nikkei400 in 2014. The index highlighted the country's "best-run" companies by annually selecting the...
We conduct an exploratory analysis of how researchers can address the issue of ?construct validity?, which poses a major challenge to all studies of the effect of corporate governance on firm performance. Many corporate governance...
We analyze the efficiency of indexing executive pay by calibrating the standard model of executive compensation to a large sample of US CEOs. The benefits from linking the strike price of stock options to an index are small and fully...
Financial economists and commercial providers of governance services have in recent years created measures of the quality of firms' corporate governance which collapse into a single number (a governance index or rating) the multiple...
In a companion paper, we report evidence that a broad corporate governance index predicts higher share prices for Korean firms. Bernard Black, Hasung Jang and Woochan Kim, Does Corporate Governance Affect Firms' Market Values?...
Passive investors, such as Vanguard or Blackrock, that track an index and have no discretion over their investments own a growing...Read more
Prof. Jill Fisch (University of Pennsylvania Law School) presents her paper on "The New Titans of Wall Street: A Theoretical Framework for Passive Investors" at the "Corporate Governance And Ownership With Diverse Shareholders" conference at IESE Business School, Barcelona. Discussion of the paper is then presented by Prof. Rafael Repullo (Centro de Estudios Monetarios y Financieros (CEMFI)). The full paper and slides from this presentation can be downloaded here: ecgi.global/content/corporate-governance-and-ownership-diverse-shareholders#!event-programme
We conduct an exploratory analysis of how researchers can address the issue of “construct validity”, which poses a major challenge to all studies of the effect of corporate governance on firm performance. Many corporate governance studies rely on aggregate governance “indices” to measure underlying, unobserved governance. But we are not confident that we know how to build these indices – often we are unsure both as to what is “good” governance, and how one can proxy for this vague concept using observable measures. These are construct validity questions.
