The Corporate Governance Premium, Returns, and Mutual Funds

The Corporate Governance Premium, Returns, and 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 mutua...

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Veröffentlicht in:The Financial review (Buffalo, N.Y.) N.Y.), 2012-05, Vol.47 (2), p.299-326
Hauptverfasser: Chou, Julia, Hardin III, William G.
Format: Artikel
Sprache:eng
Schlagworte:
Corporate governance
G11
G23
G34
Institutional investments
Investment policy
Mutual funds
Preferences
premium
Rates of return
Studies
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Zusammenfassung: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.
ISSN:0732-8516
1540-6288
DOI:10.1111/j.1540-6288.2012.00330.x