Small business of-interest and need-to-know…
Excerpt………Our study documents that the G-Index and E-Index were no longer associated with abnormal returns during the period of 2000-2008 (or any sub-periods within it), and then proceeds to investigate what explains both the existence of the governance-returns correlation during the 1990s and its subsequent disappearance. We identify several systematic differences between the 1990s and subsequent years and relate them to the disappearance of the governance-returns correlation. We provide evidence that is consistent with the hypothesis that both the existence and disappearance of the correlation were due to market participants’ learning to appreciate the difference between well-governed and poorly-governed firms.
Read full article…….via Learning and the Disappearing Association between Governance and Returns — The Harvard Law School Forum on Corporate Governance and Financial Regulation.
