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Corporate governance and market valuation of capital and R&D investments
Author(s) -
Chung Kee H.,
Wright Peter,
Kedia Ben
Publication year - 2002
Publication title -
review of financial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 41
eISSN - 1873-5924
pISSN - 1058-3300
DOI - 10.1016/s1058-3300(02)00063-0
Subject(s) - corporate governance , valuation (finance) , business , market value , capital market , institutional investor , economics , monetary economics , accounting , financial economics , financial system , finance
In this study, we examine how corporate governance structure affects market valuation of capital and R&D investments. We employ three empirical proxies of corporate governance—analyst following, board composition, and institutional holdings, and study whether market valuation of corporate investments varies with governance structure. Our results show that the market valuation of the firm's capital and R&D investments depends critically on analyst following and board composition, but not on institutional holdings.