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Klock, M., Mansi, S., Maxwell. W., 2005. Does Corporate Governance Matter to Bondholders?, Journal of Financial and Quantitative Analysis 40, 693-719.

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Article

Gompers versus Bebchuck Governance Measure and Firm Value

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

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


Journal of Finance and Economics. 2016, Vol. 4 No. 6, 184-190
DOI: 10.12691/jfe-4-6-3
Copyright © 2016 Science and Education Publishing

Cite this paper:
Frederick Adjei, 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.

Correspondence to: Frederick  Adjei, Economics and Finance Department, Southeast Missouri State University, Cape Girardeau, USA. Email: fadjei@semo.edu

Abstract

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.

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