TY - JOUR
T1 - Are investors concerned by annual corporate governance reports? Some evidence from the Spanish stock market
AU - Martinez-Blasco, Monica
AU - Garcia-Blandon, Josep
AU - Castillo-Merino, David
N1 - Publisher Copyright: © 2017 European Academy of Management
PY - 2017/12/1
Y1 - 2017/12/1
N2 - While prior research has generally shown a positive price reaction to voluntary declarations of compliance with codes of corporate governance, this is the first paper to examine how investors react to the release of mandatory corporate governance reports. Positive reactions to declarations of compliance are generally interpreted in terms of signalling effects for those companies more committed with transparency. However, once corporate governance reports are mandatory, such signalling effects make no sense anymore. In the current context, the market would react according to the relevance of the information conveyed by the report. While prior related research has examined market reactions only through the behaviour of returns, we use three indicators: returns, price volatility and trading volumes. Our main result would be the lack of a significant market reaction to the release of corporate governance reports. This finding is robust as it is reported for each indicator of market reaction. However, for some subsamples of firms we show some weak reactions in the lines suggested by the agency theory. Our results might have some implications for regulators and policy makers when designing corporate governance regulations.
AB - While prior research has generally shown a positive price reaction to voluntary declarations of compliance with codes of corporate governance, this is the first paper to examine how investors react to the release of mandatory corporate governance reports. Positive reactions to declarations of compliance are generally interpreted in terms of signalling effects for those companies more committed with transparency. However, once corporate governance reports are mandatory, such signalling effects make no sense anymore. In the current context, the market would react according to the relevance of the information conveyed by the report. While prior related research has examined market reactions only through the behaviour of returns, we use three indicators: returns, price volatility and trading volumes. Our main result would be the lack of a significant market reaction to the release of corporate governance reports. This finding is robust as it is reported for each indicator of market reaction. However, for some subsamples of firms we show some weak reactions in the lines suggested by the agency theory. Our results might have some implications for regulators and policy makers when designing corporate governance regulations.
KW - Earnings announcements
KW - Information-Content
KW - Trading volumes
KW - Return
KW - Event
KW - Firms
KW - Codes
KW - Performance
KW - Disclosure
UR - http://www.scopus.com/inward/record.url?scp=85014073642&partnerID=8YFLogxK
UR - https://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcAuth=Alerting&SrcApp=Alerting&DestApp=WOS&DestLinkType=FullRecord;KeyUT=000417845000003
U2 - 10.1111/emre.12114
DO - 10.1111/emre.12114
M3 - Article
AN - SCOPUS:85014073642
SN - 1740-4754
VL - 14
SP - 391
EP - 407
JO - European Management Review
JF - European Management Review
IS - 4
ER -