Journal of Finance and Economics
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Journal of Finance and Economics. 2016, 4(6), 184-190
DOI: 10.12691/jfe-4-6-3
Open AccessArticle

Gompers versus Bebchuck Governance Measure and Firm Value

Frederick Adjei1, and Mavis Adjei2

1Economics and Finance Department, Southeast Missouri State University, Cape Girardeau, USA

2Marketing Department, Southern Illinois University Carbondale, Carbondale, USA

Pub. Date: December 21, 2016

Cite this paper:
Frederick Adjei and Mavis Adjei. Gompers versus Bebchuck Governance Measure and Firm Value. Journal of Finance and Economics. 2016; 4(6):184-190. doi: 10.12691/jfe-4-6-3


This study compares the two primary measures of corporate governance quality, [1], GIM index and [2] E index using tests for comparing two nonnested models. We find that the GIM index has statistically significantly more power than the E index in explaining the variability in firm value, as measured by Tobin’s Q. This finding suggests that the IRRC provisions excluded from the E index may have a statistically significant incremental power in explaining the variability in firm value.

corporate governance firm value

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