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The influence of the financial press on stockholder wealth: the case of corporate governance
Author(s) -
Johnson Jonathan L.,
Ellstrand Alan E.,
Dalton Dan R.,
Dalton Catherine M.
Publication year - 2005
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.457
Subject(s) - shareholder , corporate governance , event study , variance (accounting) , accounting , economics , uncorrelated , business , financial economics , finance , paleontology , context (archaeology) , statistics , mathematics , biology
This study examines the impact that the publication of ratings of boards of directors by the business press has on stockholder wealth. We report findings from an event study of price reactions to the publication of Business Week 's 1996 and 1997 ratings of boards of directors of U.S. corporations. As hypothesized, favorable ratings resulted in significant positive abnormal returns after controlling for market effects and confounding events, with only novel information explaining statistical variance. Contrary to expectations, unfavorable ratings also resulted in positive abnormal returns. Copyright © 2005 John Wiley & Sons, Ltd.