Izvorni znanstveni članak
https://doi.org/10.1080/1331677X.2020.1774789
Measuring the impact of governance quality on stock market performance in developed countries
Zulfiqar Ali Imran
Abdullah Ejaz
Cristi Spulbar
Ramona Birau
Periyapatna Sathyanarayana Rao Nethravathi
Sažetak
The aim of this article is to examine the relationship between
stock market performance and country level governance indicators.
A good quality of governance in a country ensures effective
implementation of laws which can protect the investor and
improve stock market performance and vice versa. Our study utilises
annual stock returns and country level governance indicators
for 25 developed countries from 1996 to 2018. The fixed effect
estimation suggests that stock market performance and governance
indicators share a positive relationship. Our findings suggest
that high quality of governance is associated with higher returns
on stock. Institutional quality is a preconditioned for financial
developed that set the direction of change to reduce transaction
costs and agency costs and make profitable projects available to
firms that subsequently leads to higher demand for equity financing.
These findings have significant implications for stock market
policymakers and standard asset pricing models that only include
market risk factors to predict future expected stock returns
Ključne riječi
country level governance indicators; corporate level governance indicators; stock market returns; transaction costs and agency costs; clustering; financial system
Hrčak ID:
254714
URI
Datum izdavanja:
9.2.2021.
Posjeta: 1.119 *