Investability, Corporate Governance and Firm Value

O’Connor, Thomas

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Investability, Corporate Governance and Firm Value

Research in International Business and Finance, Vol. 26, No. 1, pp. 120-136, January 2012

26 Pages Posted: 16 Jan 2012

See all articles by Thomas O’Connor

Thomas O’Connor

National University of Ireland, Maynooth (NUI Maynooth) - Department of Economics, Finance and Accounting

Date Written: January 15, 2012

Abstract

In this paper, I show that “investable premia” are greatest for transparent, well-governed firms. I find that single-class share investable firms and better-governed firms reap the largest valuation gains from becoming investable. Dual-class share firms do gain from becoming investable, but their gains are much lower than that of single-class share firms. These findings suggest that the failure on the part of firms to remedy agency conflicts prior to becoming investable only serves to greatly reduce, or even nullify their “investable premia.”

Keywords: Investability, Corporate Governance, Tobin’s q

JEL Classification: G15, G34, F36

Suggested Citation: Suggested Citation

O'Connor, Thomas, Investability, Corporate Governance and Firm Value (January 15, 2012). Research in International Business and Finance, Vol. 26, No. 1, pp. 120-136, January 2012 , Available at SSRN: https://ssrn.com/abstract=1985535