Governing misvalued firms
By: Dalida Kadyrzhanova, Matthew Rhodes-Kropf
Contributors: Rhodes-Kropf, Matthew; Harvard Business School
Series: Working paper / Harvard Business School -- 13-037; Working paper (Harvard Business School) -- 13-037
Publisher: Harvard Business School
Published: 2012
Place of publication: Boston ]
Language: eng
Number of pages: 45
Description: Equity overvaluation is thought to create the potential for manager misbehavior, while monitoring and corporate governance curb misbehavior. Thus, the effects of corporate governance should be greatest when firms become overvalued. We test this simple yet powerful idea. Using proxies of firm and industry price deviations from fundamentals and standard measures of corporate governance, we demonstrate that firm performance seems most impacted by governance when firm and industry deviations are high. Our findings suggest that misvaluation may modulate the fundamental governance relationship between shareholders and CEOs.
Notes: "October 2012" -- Publisher's website.

Includes bibliographical references (pages 30-33).