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The Corporate Governance Premium, Returns, and Mutual Funds
Author(s) -
Chou Julia,
Hardin III William G.
Publication year - 2012
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.2012.00330.x
Subject(s) - corporate governance , institutional investor , closed end fund , mutual fund , preference , business , commodity pool , stock (firearms) , open end fund , fund of funds , passive management , affect (linguistics) , finance , monetary economics , economics , microeconomics , mechanical engineering , market liquidity , engineering , linguistics , philosophy
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.
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