Good Corporate Governance pays off! Well-governed companies perform better on the stock market
|
|
- Edgar Carr
- 7 years ago
- Views:
Transcription
1 Good Corporate Governance pays off! Well-governed companies perform better on the stock market Institutional investors are thus encouraged to account for corporate governance in their investment strategy. April 2003 Rob Bauer and Nadja Guenster Rob Bauer is Head of Research at ABP Investments and associate professor at the University Maastricht. Nadja Guenster is a researcher at the Rotterdam School of Management, Erasmus University. Introduction Corporate Governance deals with agency problems arising in the modern corporation due to the separation of ownership and control. There are different disciplining devices to protect shareholder interests and thus reduce agency costs. Examples of such mechanisms are the legal framework, the board of directors, and an active takeover market. How effective these mechanisms are depends on listing rules, corporate law, articles of association and market liquidity. Furthermore, shareholders can actively collect information and monitor management to ensure that they act in their best interest. In a bull market, like the 90s, the corporate governance discussion focused mainly on the role and the responsibilities of the bodies of the company, such as the board of directors, the supervisory board and the Annual General Meeting of shareholders (AGM). 1 In a bear market, witnessed for the past two years, the attention shifted towards the intermediaries between the corporation and the shareholders, such as accountants, banks and institutional investors. 2 A rather new development is the institutionalisation of equity ownership. Insurers, pension and investment funds, as well as other institutional investors hold an increasing percentage of shares outstanding 3. Since these institutional investors are usually minority shareholders, the takeover market and the supervisory function are no feasible disciplinary mechanisms. So far, these institutions make in practice only limited use of their rights as shareholders. In case of scandals, such as the recent Enron and Ahold debacle, they generally sell The attention recently shifted to the parties between shareholders and a company: accountants, banks, institutional investors. The question whether these institutions should incorporate corporate governance into their investment policy becomes increasingly relevant. 1 Please refer to: The forty recommendations, Commissie Corporate Governance, the Netherlands, Please refer to: Corporate Governance 2002, de stand van zaken, Nederlandse Corporate Governance Stichting, Source: National Accounts 2001, pp , CBS, Page 1 of 6
2 their shares, also known as voting with their feet. 4 In this way, badly governed companies are explicitly penalised and well-governed companies are implicitly rewarded. In our research, we investigate the explicit penalisation and reward in an investment context. More specifically, can institutional investors achieve superior results following a strategy of over- weighting well-governed companies in their portfolios? 1 Purpose and methodology of the research Within this research, we examine the impact of corporate governance on stock returns, firm value and operating performance for firms incorporated in member states of the European Monetary Union (EMU). The methodology of our study is comparable to Gompers, Ishii and Metrick (2001, see textbox). To indicate a firm s governance standards we use in our study Deminor Corporate governance ratings. Deminor Rating 5 (hereafter, Deminor ) bases its score on approximately 300 criteria, which can be subdivided into four categories: Rights and duties of shareholders Range of takeover defences Disclosure on corporate governance Board structure and functioning The relative importance of the different criteria is established based on a survey held among institutional investors. The advantage of the Deminor ratings is the wide range of underlying criteria, the disadvantage is the limited time-span of ratings: 2001 and In the following paragraph we will summarise the empirical results of our study. Scientific research on the effects of corporate governance is mainly dedicated to finding the link between corporate governance and the development in stock price, valuation and profit of a company. In general a positive correlation was observed 6, but it should be mentioned that the majority of corporate governance studies focuses on one very specific variable, usually antitakeover amendments or the specific composition and functioning of the board of directors. Additionally, most studies are short-term oriented (so-called event studies) and refer to US data. 7 The first two remarks do not apply to the study of Gompers et al. (2001) 8. They We measure the impact of corporate governance on stock returns, firm value and financial performance. This research uses Deminor Rating s data to measure the corporate governance performance of companies. The sample is the FTSE Eurotop 300 over two years. 4 In the United States, public sector pension funds had to vote their shares as part of their fiduciary duty as early as In the United Kingdom, they are encouraged to do so since 2001 (Myners Report). In January 2002, the Dutch ministry of finance called for a similar measure. The Winter Commission (2002) recommends that institutional investors be responsible for the way they use their voting rights. The American Securities and Exchange Committee (SEC) recently published rules compelling asset managers to inform their clients on their voting practice. 5 Deminor Rating s Corporate Governance Ratings are designed to assess the corporate governance performance of listed companies based on public information. 6 For a recent overview, see M. Becht, P. Bolton and A. Roëll, Corporate Governance and Control, SSRN (see Some exceptions are studies covering the Netherlands: A. de Jong et al., The Role of Self-Regulation in Corporate Governance: Evidence from the Netherlands, SSRN, 2002, Russia: Black, Does Corporate Governance Matter? A Crude Test Using Russian Data, University of Pennsylvania Law Review, 2001, vol. 149 and R. Laporta et al., Page 2 of 6
3 used 24 different corporate governance criteria for about 1,500 companies from September 1990 to December Its most important data source was the Investor Responsibility Research Center (IRRC). 9 The study only dealt with US companies. Gompers et al. found that an investor can earn an annual excess return of about 8.5% holding a zero investment portfolio composed of a long position in well-governed companies and a short position in badly governed companies. 2 Empirical results 2.1 The impact on equity returns Following Gompers, et al. (2001) 10, we compare the return of a portfolio consisting of well-governed companies to the return of a portfolio composed of badly governed companies. Our sample consists of Euro zone companies included in the FTSE Eurotop 300 index. The above-mentioned categories used by Deminor are highly correlated. Companies with a high score for Disclosure on Corporate Governance usually also have a high score for Rights and Duties of Shareholders. The average correlation is larger than Therefore we will use the sum of all four ratings in our research. The Deminor ratings also seem to be stable over time. The majority of companies has a similar score for both years. Based on this evidence we assume in our empirical analysis that the total rating for the year 2000 was also valid in the period Hence, the study covers the period To construct the portfolio, we go long (buy) in the good governance companies and short (sell) in the bad governance companies. Table 1.a Summary of empirical results (annual percentages) a. Difference in return between good and bad governance portfolios standard (i) 2.10 % corrected for risk (ii) 1.58 % Good governance portfolios outperform bad governance portfolios by 2.97% annually. corrected for risk and sector-neutral (iii) 2.97 % *** significant (1%), ** significant (5%), * significant (10%). In table 1a we first simply compute the difference in annual return, without accounting for differences in portfolio characteristics. (Standard: i). We then correct the returns of both Investor Protection and Corporate Valuation, NBER, 2001, which compares 27 countries. 8 See P. Gompers, J. Ishii and A. Metrick, Corporate Governance and Equity Prices, NBER, See P. Gompers, J. Ishii and A. Metrick, Corporate Governance and Equity Prices, NBER, Unfortunately, there is currently no better database available for this type of research. Nevertheless, a company s ratings are correlated from year to year. We therefore consider, as did W. Drobetz et al., Corporate Governance and Expected Stock Returns: Evidence From Germany, Working Paper, University of Basel a research on the added value of corporate governance in the German context - that the governance ratings were constant in the recent past (<3 years). Page 3 of 6
4 portfolios for risk factors: the difference in market risk, firm size and a variety of other factors, which influence both portfolios (given by: corrected for risk: ii). Finally, we additionally adjust for sector effects (given by: corrected for risk and sector-neutral: iii). This procedure allows us to distinguish the impact of corporate governance from the impact of other factors on the portfolio returns. All results refer to the period. The methodology adopted for the research is similar to that of Gompers, Ishii en Metrick (2001), originally presented by Fama en French (1993) and Carhart (1997) 12. Table 1a presents the results of the long-short strategy based on the total Deminor rating. We hold a long position (buy) in the good governance portfolio and a short position (sell) in the bad governance portfolio. A positive difference in return between these two portfolios implies that a high Deminor rating has a relatively positive influence on the share return of a company. The results in table 1a clearly demonstrate that the good governance portfolio performs better than the bad governance portfolios. The difference in performance after correction for sector influences is approximately three percent annually. 13 An investment strategy based on over-weighting companies with good governance and under-weighting companies with bad governance will create value for investors. 2.2 The influence on the valuation of the company Like Gompers et al. (2001) we investigate the influence of corporate governance on the valuation of a company. Firm value is measured by Tobin s q, which is defined as the market value of a company s assets divided by their replacement value. A high (low) q implies that investors are willing to pay relatively more (less) for a company compared to its book value. Table 1.b Summary of empirical results (annual percentages) b. Corporate governance and the valuation of the company (Tobin s q) Influence of corporate governance rating on Tobin s q 0.14 % *** *** significant (1%), ** significant (5%), * significant (10%). Table 1b shows the impact of the Deminor ratings on firm valuation, after controlling for the influence of other factors. An increase of the Deminor rating of 1% equals an increase of 0.14% of the market value of a company s assets divided by their replacement value In table 1b we present the relation between Tobin s q and the total Deminor ratings after accounting for other factors influencing q. The coefficient of the governance rating is statistically significant and positive: A one- percent increase in the Deminor rating translates into a 0.14 percent increase in firm value. Investors seem to be willing to pay more for a company with a higher 12 E. Fama en K. French, Common Risk Factors in Stock and Bond Portfolios, Journal of Financial Economics, vol. 33, 1993, pp and M. Carhart, On Persistence in Mutual Fund Performance, Journal of Finance, vol. 52, 1997, pp The α s are positive but not statistically significant. This is due to the short time frame and the relatively small sample. It is also important to bear in mind that we did not take transaction costs into account. Page 4 of 6
5 rating: an improvement in the corporate governance rating of a company leads on average to a higher value on the stock market. This result coincides with the conclusions of Gompers et al. and with the findings of a survey among institutional investors recently -published by McKinsey The impact of corporate governance on operating performance The final point of interest in our study is the relation between corporate governance and operating performance, as measured by net-profit-margin (NPM) and return-on-equity (ROE). Table 1.c Summary of empirical results c. Corporate governance and operating performance Influence of corporate governance rating on net-profit-margin *** Influence of corporate governance rating on return-on-equity ** *** significant (1%), ** significant (5%), * significant (10%). Table 1c presents the influence of Deminor ratings on the net profit margin and return on equity respectively, once again after controlling the influence of other relevant factors. The results in table 1c demonstrate that there is a negative correlation between the Deminor ratings and NPM as well as ROE. At first glance it may seem odd that companies with a high corporate governance score deliver a higher return and are valued higher, but achieve inferior (or worse) operating performance (or operating profitability). A possible explanation would be that NPM and ROE are based on accounting figures (namely profit), which can be influenced by management. Our hypotheses for bad (good) performance of companies with a high (low) corporate governance rating, is that companies may be more (less) prudent in their accounting standards. A validation or refutation of this hypothesis requires further investigation. Limits of the study, such as limited historical data, call for more research. But the current results are promising. 14 See: Global Investor Opinion Survey: Key Findings, McKinsey & Company, July 2002: Page 5 of 6
6 3 Conclusion In conclusion, the results of our research seem very promising: portfolios of companies with high corporate governance standards perform better than companies with worse standards. Investors value well-governed companies significantly higher. The limited history of the Deminor ratings requires cautious interpretation. In our opinion a lot more energy and time need to be invested into the expansion and perfection of databases and the stimulation of further research. The encouraging results (or findings) of this study should convince institutional investors to account for corporate governance standards in their investment process. In the future, institutional investors should rather vote with their head reward well-governed companies and punish badly-governed companies than merely vote with their feet! The encouraging findings of this study should persuade (or convince) institutional investors to include corporate governance in their investment process. Rob Bauer and Nadja Guenster Page 6 of 6
Corporate Governance Standards: The Importance of Compliance and Main Issues in Germany. Christian Strenger
World Bank / OECD The Global Corporate Governance Forum 5th Meeting of the Eurasian Corporate Governance Roundtable Session IV 'The Role of National Corporate Governance Principles for Fostering a Culture
More information60325 Frankfurt am Main, Germany
A Quantitative Approach to Responsible Investment: Using a ESG-Multifactor Model to improve Equity Portfolios Dr. Andrij Fetsun 1, Dr. Dirk Söhnholz 1, 1 Veritas Investment GmbH, mainbuilding, Taunusanlage
More informationInterpretation of Financial Statements
Interpretation of Financial Statements Author Noel O Brien, Formation 2 Accounting Framework Examiner. An important component of most introductory financial accounting programmes is the analysis and interpretation
More informationEnhanced Indexing equity strategy benefits from RobecoSAM scores
ARTICLE June 2014 For professional investors Enhanced Indexing equity strategy benefits from RobecoSAM scores ESG factors integrated in Robeco Enhanced Indexing RobecoSAM scores in the stock selection
More informationA Test Of The M&M Capital Structure Theories Richard H. Fosberg, William Paterson University, USA
A Test Of The M&M Capital Structure Theories Richard H. Fosberg, William Paterson University, USA ABSTRACT Modigliani and Miller (1958, 1963) predict two very specific relationships between firm value
More informationEquity Market Risk Premium Research Summary. 12 April 2016
Equity Market Risk Premium Research Summary 12 April 2016 Introduction welcome If you are reading this, it is likely that you are in regular contact with KPMG on the topic of valuations. The goal of this
More informationStatement of Financial Condition
Financial Report for the 14th Business Year 5-1, Marunouchi 1-Chome, Chiyoda-ku, Tokyo Citigroup Global Markets Japan Inc. Rodrigo Zorrilla, Representative Director, President and CEO Statement of Financial
More informationMarket Efficiency and Behavioral Finance. Chapter 12
Market Efficiency and Behavioral Finance Chapter 12 Market Efficiency if stock prices reflect firm performance, should we be able to predict them? if prices were to be predictable, that would create the
More informationPart V: Fundamental Analysis
Securities & Investments Analysis Last 2 Weeks: Part IV Bond Portfolio Management Risk Management + Primer on Derivatives Lecture #0: Part V Individual equity valuation Fundamental Analysis Top-Down Analysis
More informationFourteenth Meeting of the IMF Committee on Balance of Payments Statistics Tokyo, Japan, October 24-26, 2001
BOMCOM-01/22 Fourteenth Meeting of the IMF Committee on Balance of Payments Statistics Tokyo, Japan, October 24-26, 2001 Mutual Funds and Fund of Funds : Portfolio Investment or Direct Investment? Prepared
More informationCronyism and Delaware Incorporation: An Examination on Excess Compensation
Cronyism and Incorporation: An Examination on Excess Compensation Qian Xie 1 1 School of Business and Management, East Stroudsburg University of Pennsylvania, East Stroudsburg, USA Correspondence: Qian
More informationRisk, Return and Market Efficiency
Risk, Return and Market Efficiency For 9.220, Term 1, 2002/03 02_Lecture16.ppt Student Version Outline 1. Introduction 2. Types of Efficiency 3. Informational Efficiency 4. Forms of Informational Efficiency
More informationProseminar Finance and Banking Summer Term 2012
Catholic University of Eichstaett-Ingolstadt Chair of Finance and Banking Prof. Dr. Thomas Mählmann Proseminar Finance and Banking Summer Term 2012 List of Topics 1 Credit Default Swaps Credit derivatives
More informationGovernment Pension Fund Global strategic benchmark index for equity investments
Finansdepartementet Boks 8008 Dep. 0030 Oslo Date: 2 February 2012 Your ref.: Our ref.: Government Pension Fund Global strategic benchmark index for equity investments In this letter, Norges Bank provides
More informationStock Exchange of Mauritius: Newsletter
Stock Exchange of Mauritius: Newsletter June 2016 INSIDE THIS ISSUE: 1 EXCHANGE INSIGHT: SEM interviews Gareth Stobie, Managing Director of Coreshares in the context of the listing on SEM of the CoreShares
More informationDividend Yield and Stock Return in Different Economic Environment: Evidence from Malaysia
MPRA Munich Personal RePEc Archive Dividend Yield and Stock Return in Different Economic Environment: Evidence from Malaysia Meysam Safari Universiti Putra Malaysia (UPM) - Graduate School of Management
More informationShares Mutual funds Structured bonds Bonds Cash money, deposits
FINANCIAL INSTRUMENTS AND RELATED RISKS This description of investment risks is intended for you. The professionals of AB bank Finasta have strived to understandably introduce you the main financial instruments
More informationHow To Understand The Value Of Sustainability
Innovest Uncovering Hidden Value for Strategic Investors The Investor Perspective Sustainability & the Triple Bottom Line NYC, Fashion Institute of Technology 29 May 2008 New York Paris Toronto London
More informationEstimating the Market Risk Premium for Australia using a Benchmark Approach
Appendix B Estimating the Market Risk Premium for Australia using a Benchmark Approach 1 The market risk premium ( MRP ) for Australia in 2005 and going forward is set in an international market. Investment
More informationTHE COMBINED CODE PRINCIPLES OF GOOD GOVERNANCE AND CODE OF BEST PRACTICE
THE COMBINED CODE PRINCIPLES OF GOOD GOVERNANCE AND CODE OF BEST PRACTICE Derived by the Committee on Corporate Governance from the Committee s Final Report and from the Cadbury and Greenbury Reports.
More informationSolvency II and key considerations for asset managers
120 Solvency II and key considerations for asset managers Thierry Flamand Partner Insurance Leader Deloitte Luxembourg Xavier Zaegel Partner Financial Risks Leader Deloitte Luxembourg Sylvain Crepin Director
More informationReal estate and infrastructure investments by Norwegian GPFG
Real estate and infrastructure investments by Norwegian GPFG Comments by Karin S. Thorburn Research Chair Professor of Finance Norwegian School of Economics Oslo December 17, 2015 1 / 11 GPFG already holds
More informationGerman Corporate Governance Code
(as amended on May 26, 2010) Government Commission German Corporate Governance Code 1. Foreword 1 This German Corporate Governance Code (the "Code") presents essential statutory regulations for the management
More informationCorporate Governance Best Practice and Stock Performance: Case of CEE Companies
31/8/7 24/1/7 17/12/7 11/2/8 2/4/8 26/5/8 16/7/8 4/9/8 3/11/8 29/12/8 19/2/9 1/4/9 5/6/9 27/7/9 16/9/9 11/11/9 6/1/1 25/2/1 19/4/1 1/6/1 2/8/1 27/9/1 24/11/1 14/1/11 7/3/11 Corporate Governance Best Practice
More informationON THE RISK ADJUSTED DISCOUNT RATE FOR DETERMINING LIFE OFFICE APPRAISAL VALUES BY M. SHERRIS B.A., M.B.A., F.I.A., F.I.A.A. 1.
ON THE RISK ADJUSTED DISCOUNT RATE FOR DETERMINING LIFE OFFICE APPRAISAL VALUES BY M. SHERRIS B.A., M.B.A., F.I.A., F.I.A.A. 1. INTRODUCTION 1.1 A number of papers have been written in recent years that
More informationCorporate Governance & Performance - The Missing Links
Corporate Governance & Performance - The Missing Links A brief review and assessment of the evidence for a link between corporate governance and performance Contents Introduction 1 Governance-ranking based
More informationFor professional investors and advisers only. Schroders. European equities
For professional investors and advisers only Schroders European equities Schroders European equities Schroders has a proud heritage of investing in European equities and we have built a successful and
More informationCash Holdings and Mutual Fund Performance. Online Appendix
Cash Holdings and Mutual Fund Performance Online Appendix Mikhail Simutin Abstract This online appendix shows robustness to alternative definitions of abnormal cash holdings, studies the relation between
More informationHow To Calculate Financial Leverage Ratio
What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? HOCK international - 2004 1 HOCK international - 2004 2 How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated? HOCK
More informationNCC Pension Fund Cash Flow and Strategic Asset Allocation
Background NCC Pension Fund Cash Flow and Strategic Asset Allocation At recent Sub Committee meetings there has been some discussion of, and some concern expressed at, the possible evolution of contributions
More informationSTATEMENT OF INVESTMENT POLICIES AND OBJECTIVES. WASHINGTON AND LEE UNIVERSITY The General Endowment Fund. Approved May 2007
STATEMENT OF INVESTMENT POLICIES AND OBJECTIVES WASHINGTON AND LEE UNIVERSITY The General Endowment Fund Approved May 2007 This statement is issued by the investment committee of the board of trustees
More informationGuidelines for Unfair Trade Practices Associated with. Relaxation of Controls over Classification of Business
Guidelines for Unfair Trade Practices Associated with Relaxation of Controls over Classification of Business Categories and Expansion of Scope of Business for Financial Institutions December 1, 2004 Fair
More informationPosition Paper. Full consolidation of partly owned subsidiaries requires additional disclosure
Position Paper Full consolidation of partly owned subsidiaries requires additional disclosure 1. Introduction Many entities control one or more partly owned subsidiaries 1. International Financial Reporting
More informationCode for prudent. investment policy
Code for prudent investment policy ABP Code for Prudent Investment Policy 2000 INVESTMENTS SOLELY IN THE INTEREST OF PARTICIPANTS RISK/RETURN Introduction The Governing Board of the foundation "Stichting
More informationBenchmarking Low-Volatility Strategies
Benchmarking Low-Volatility Strategies David Blitz* Head Quantitative Equity Research Robeco Asset Management Pim van Vliet, PhD** Portfolio Manager Quantitative Equity Robeco Asset Management forthcoming
More informationInvestment Companies
Mutual Funds Mutual Funds Investment companies Financial intermediaries that collect funds form individual investors and invest those funds in a potentially wide rande of securities or other asstes Polling
More informationEquities (Stocks) 101
Equities (Stocks) 101 Tariq Ali Asghar www.emergingstar.com 1 TABLE OF CONTENTS 1. Common Shares 2. Preferred Shares 3. Dividends 4. Miller and Modigliani Theory 5. Dividends are Less Tax-Efficient 6.
More informationThe impact of liquidity on the capital structure: a case study of Croatian firms
The impact of liquidity on the capital structure: a case study of Croatian firms Nataša Šarlija Faculty of Economics, J.J. Strossmayer University of Osijek, Osijek, Croatia Martina Harc Institute for Scientific
More informationTHE REPURCHASE OF SHARES - ANOTHER FORM OF REWARDING INVESTORS - A THEORETICAL APPROACH
THE REPURCHASE OF SHARES - ANOTHER FORM OF REWARDING INVESTORS - A THEORETICAL APPROACH Maria PRISACARIU Faculty of Economics and Business Administration, Alexandru Ioan Cuza University, Iasy, Romania,
More informationTHE GREAT RISK/RETURN INVERSION - WHO LOSES OUT?
THE GREAT RISK/RETURN INVERSION - WHO LOSES OUT? ANDREA BUFFA DIMITRI VAYANOS PAUL WOOLLEY LSE, SEPTEMBER 2014 Risk and return go hand in hand as companion variables central to the teaching and practice
More informationCash Management Group Solvency II and Money Market Funds
Cash Management Group Solvency II and Money Market Funds The opinions expressed are as of June 2012 and may change as subsequent conditions vary. Managing cash and short term investments is an essential
More informationRISK PARITY ABSTRACT OVERVIEW
MEKETA INVESTMENT GROUP RISK PARITY ABSTRACT Several large plans, including the San Diego County Employees Retirement Association and the State of Wisconsin, have recently considered or decided to pursue
More informationChapter 5. Conditional CAPM. 5.1 Conditional CAPM: Theory. 5.1.1 Risk According to the CAPM. The CAPM is not a perfect model of expected returns.
Chapter 5 Conditional CAPM 5.1 Conditional CAPM: Theory 5.1.1 Risk According to the CAPM The CAPM is not a perfect model of expected returns. In the 40+ years of its history, many systematic deviations
More informationTD Direct Investing Relationship Disclosure
TD Direct Investing Relationship Disclosure Welcome to TD Direct Investing. We are committed to providing you with exceptional service, support and a comfortable investing experience to meet your unique
More informationMarket Seasonality Historical Data, Trends & Market Timing
Market Seasonality Historical Data, Trends & Market Timing We are entering what has historically been the best season to be invested in the stock market. According to Ned Davis Research if an individual
More informationReferred to as the statement of financial position provides a snap shot of a company s assets, liabilities and equity at a particular point in time.
Glossary Aggressive investor Balance sheet Bear market Typically has a higher risk appetite. They are prepared or can afford to risk much more and for this they stand to reap the big rewards. Referred
More informationCorporate Governance and Operating Performance of Chinese Listed Firms
Corporate Governance and Operating Performance of Chinese Listed Firms By Heibatollah Sami Department of Accounting College of Business and Economics Lehigh University E-mail: hes205@lehigh.edu Justin
More informationInternational Perspectives - Corporate Governance Regulations and Approaches
International Perspectives - Corporate Governance Regulations and Approaches Introduction: The recent development in regulations of corporate governance has received notable attention from academics and
More informationTilted Portfolios, Hedge Funds, and Portable Alpha
MAY 2006 Tilted Portfolios, Hedge Funds, and Portable Alpha EUGENE F. FAMA AND KENNETH R. FRENCH Many of Dimensional Fund Advisors clients tilt their portfolios toward small and value stocks. Relative
More informationCorporate governance, value and performance of firms: New empirical results from a large international database
Corporate governance, value and performance of firms: New empirical results from a large international database Abstract: Based on a large international database (2662 firms from 25 industries, operating
More informationWho is in charge: Corporate Communications or Corporate Marketing?
Who is in charge: Corporate or Corporate Marketing? A European survey amongst the top reputation leading companies i Markus Will, Malte Probst and Thomas Schmidt, ii Centre for Corporate, mcm institute
More informationExamine the Relationship between Capital Structure, Free Cash and Operational Risks
International Research Journal of Management Sciences. Vol., 3 (7), 303-307, 2015 Available online at http://www.irjmsjournal.com ISSN 2147-964x 2015 Examine the Relationship between Capital Structure,
More informationEconomia Aziendale online 2000 Web International Business and Management Review
Economia Aziendale online 2000 Web International Business and Management Review N. 1/2008 Special Issue 3 rd International Economic Scientific Session International Scientific Conference European Integration
More informationTD is currently among an exclusive group of 77 stocks awarded our highest average score of 10. SAMPLE. Peers BMO 9 RY 9 BNS 9 CM 8
Updated April 16, 2012 TORONTO-DOMINION BANK (THE) (-T) Banking & Investment Svcs. / Banking Services / Banks Description The Average Score combines the quantitative analysis of five widely-used investment
More informationConsolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2016 (Japan GAAP)
Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2016 (Japan GAAP) Name of Listed Company: Yokogawa Electric Corporation (the Company herein) Stock Exchanges Where
More informationFLASH ECONOMICS. Can a central bank keep real interest rates abnormally low over the long term? ECONOMIC RESEARCH. 2 June 2016 No.
ECONOMICS ECONOMIC RESEARCH June 1 No. 53 Can a central bank keep real interest rates abnormally low over the long term? According to the usual theory: - In the short term, an expansionary monetary policy
More informationFundamentals Level Skills Module, Paper F7. Section B
Answers Fundamentals Level Skills Module, Paper F7 Financial Reporting September/December 2015 Answers Section B 1 (a) Moston Statement of profit or loss and other comprehensive income for the year ended
More informationCENTRALE BANK VAN ARUBA & THE FINANCIAL SYSTEM
CENTRALE BANK VAN ARUBA & THE FINANCIAL SYSTEM The establishment of a central bank and the issue of a national currency on the 1 st of January 1986 marked the beginning of a separate financial system for
More informationEconomic and legal advantages to business financing through the issuance of bonds
MPRA Munich Personal RePEc Archive Economic and legal advantages to business financing through the issuance of bonds Diamanta Sojeva Faculty of Economics, University of Prishtina, Kosovo 20. January 2015
More informationStructured Products. Designing a modern portfolio
ab Structured Products Designing a modern portfolio Achieving your personal goals is the driving motivation for how and why you invest. Whether your goal is to grow and preserve wealth, save for your children
More informationCHAPTER 17. Payout Policy. Chapter Synopsis
CHAPTER 17 Payout Policy Chapter Synopsis 17.1 Distributions to Shareholders A corporation s payout policy determines if and when it will distribute cash to its shareholders by issuing a dividend or undertaking
More informationThe Determinants and the Value of Cash Holdings: Evidence. from French firms
The Determinants and the Value of Cash Holdings: Evidence from French firms Khaoula SADDOUR Cahier de recherche n 2006-6 Abstract: This paper investigates the determinants of the cash holdings of French
More informationIntroduction to Australian Real Estate Debt Securities
1 Introduction Introduction to Australian Real Estate Debt Securities Superannuation fund investors and managers have for a long time invested in real estate as part of their asset allocation in the belief
More informationImportant Information about Real Estate Investment Trusts (REITs)
Robert W. Baird & Co. Incorporated Important Information about Real Estate Investment Trusts (REITs) Baird has prepared this document to help you understand the characteristics and risks associated with
More informationCHAPTER 16: MANAGING BOND PORTFOLIOS
CHAPTER 16: MANAGING BOND PORTFOLIOS PROBLEM SETS 1. While it is true that short-term rates are more volatile than long-term rates, the longer duration of the longer-term bonds makes their prices and their
More informationIMPACT OF CORPORATE GOVERNANCE ON PERFORMANCE OF COMPANIES IGOR TODOROVIĆ 1
MONTENEGRIN IMPACT OF JOURNAL CORPORATE OF ECONOMICS GOVERNANCE Vol. 9, ON No. PERFORMANCE 2 Special Issue OF COMPANIES (May, 2013), 47-53 47 IMPACT OF CORPORATE GOVERNANCE ON PERFORMANCE OF COMPANIES
More informationThe Journal of Applied Business Research Winter 2005 Volume 21, Number 1
The Journal of Applied Business Research Winter 2005 Volume 21, Number 1 An Analysis Of Mutual Fund Custodial Fees Charles P. Cullinan, (Email: cullinan@bryant.edu), Bryant College Dennis M. Bline, (Email:
More informationThe following 30 questions are drawn from the Claritas supplemental study materials. The format and difficulty level are similar to what candidates
SAMPLE QUESTIONS The following 30 questions are drawn from the Claritas supplemental study materials. The format and difficulty level are similar to what candidates experience on the live Claritas examination.
More informationApril 27, 2016. Dear Client:
Dear Client: 565 Fifth Avenue Suite 2101 New York, NY 10017 212 557 2445 Fax 212 557 4898 3001 Tamiami Trail North Suite 206 Naples, FL 34103 239 261 3555 Fax 239 261 5512 www.dghm.com Our January letter
More informationLONG-TERM FINANCING. Investor Perspectives in Europe
LONG-TERM FINANCING Investor Perspectives in Europe LONG-TERM FINANCING Investor Perspectives in Europe Overview In the aftermath of the global financial crisis, a more diversified set of intermediaries
More informationFIRST HALF-YEAR RESULTS 2005/2006
P R E S S R E L E A S E FIRST HALF-YEAR RESULTS 2005/2006 Baarn, 1 November 2005, before start of trading Main points from half-year figures for 2005/2006: Group turnover rose by 5% in the first half year
More informationIndex Solutions A Matter of Weight
Index Solutions A Matter of Weight Newsletter No. 11 Our current newsletter is about weight, or more precisely the weighting of equities in an index. Non-market capitalization weighted indices are at present
More informationI.e., the return per dollar from investing in the shares from time 0 to time 1,
XVII. SECURITY PRICING AND SECURITY ANALYSIS IN AN EFFICIENT MARKET Consider the following somewhat simplified description of a typical analyst-investor's actions in making an investment decision. First,
More informationENERGY ADVISORY COMMITTEE. Electricity Market Review: Return on Investment
ENERGY ADVISORY COMMITTEE Electricity Market Review: Return on Investment The Issue To review the different approaches in determining the return on investment in the electricity supply industry, and to
More informationAdvantages and disadvantages of investing in the Stock Market
Advantages and disadvantages of investing in the Stock Market There are many benefits to investing in shares and we will explore how this common form of investment can be an effective way to make money.
More informationOver the past several years, Americans have
Industry Securities Industry Bears, bulls, and brokers: employment trends in the securities industry in the securities industry strongly correlates with stock market value; however, market volume does
More informationIs It Time to Give Up on Active Management?
Is It Time to Give Up on Active Management? CFA Society of Pittsburgh 3 rd Annual Endowments and Foundations Conference May 2015 Gregory Woodard Portfolio Strategist Manning & Napier Advisors, LLC (Manning
More informationPerformance Evaluation on Mutual Funds
Performance Evaluation on Mutual Funds Dr.G.Brindha Associate Professor, Bharath School of Business, Bharath University, Chennai 600073, India Abstract: Mutual fund investment has lot of changes in the
More informationIFRS 13 Fair Value Measurement
May 2011 International Financial Reporting Standard IFRS 13 Fair Value Measurement International Financial Reporting Standard 13 Fair Value Measurement IFRS 13 Fair Value Measurement is issued by the International
More informationCorporate Governance as a Crucial Factor in Achieving Sustainable Corporate Performance
Corporate Governance as a Crucial Factor in Achieving Sustainable Corporate Performance Julija BISTROVA, Natalja LACE Faculty of Engineering Economics and Management, Riga Technical University 6 Kalnciema
More informationJournal Of Financial And Strategic Decisions Volume 10 Number 1 Spring 1997
Journal Of Financial And Strategic Decisions Volume 10 Number 1 Spring 1997 EMPLOYEE MANAGEMENT STRATEGY, STAKEHOLDER-AGENCY THEORY, AND THE VALUE OF THE FIRM Jeffery Heinfeldt * and Richard Curcio **
More informationA: SGEAX C: SGECX I: SGEIX
A: SGEAX C: SGECX I: SGEIX NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Salient Global Equity Fund The investment objective of the Salient Global Equity Fund (the Fund ) is to seek long term capital
More informationChapter 3 Local Marketing in Practice
Chapter 3 Local Marketing in Practice 3.1 Introduction In this chapter, we examine how local marketing is applied in Dutch supermarkets. We describe the research design in Section 3.1 and present the results
More informationORBIS SICAV ORBIS SICAV. Introductory ORBIS BOOKLET GLOBAL BALANCED FUND
ORBIS SICAV ORBIS SICAV Introductory BOOKLET ORBIS GLOBAL BALANCED FUND ORBIS SICAV Société d Investissement à Capital Variable, R.C.S. Luxembourg B 90 049 Registered Office Orbis SICAV 31, Z.A. Bourmicht
More informationCorporate Governance Scores, Tobin s Q and Equity Prices: Evidence from Canadian Capital Markets
Corporate Governance Scores, Tobin s Q and Equity Prices: Evidence from Canadian Capital Markets Parveen P. Gupta Department of Accounting, Lehigh University, Bethlehem, PA 18015-3117, USA Duane B. Kennedy
More informationABN AMRO TURBOS. Leveraged active investing. English
ABN AMRO TURBOS Leveraged active investing English The ABN AMRO Turbo. A Turbo investment. The ABN AMRO Bank N.V. ( ABN AMRO ) Turbo certificate ( Turbo ) is a derivative investment product that tracks
More informationNN Sustainable Equity
NN Equity Distinctive quality stock picking Guido Veul, CFA Client Portfolio Manager Equities March 2016 www.nnip.com1 NN Investment Partners EUR 187 bln* (USD 204 bln*) in Assets under Management Manages
More informationJapan: landmark corporate governance reforms
May 2015 Japan: landmark corporate governance reforms Japan has seen landmark reforms in corporate governance during 2014 and 2015. On 26 February 2014, Japan s Financial Services Agency (FSA) released
More informationFinance Group German Savings Banks Association. Statement by. Georg Fahrenschon. President of the German Savings Banks Association
Finance Group German Savings Banks Association Check against delivery! Statement by Georg Fahrenschon President of the German Savings Banks Association DSGV Financial Press Conference 15 March 2016, Frankfurt/Main
More informationDECEMBER 8, 2010 FINANCIAL MARKETS UPDATE. SEC Proposes Rules Exempting Certain Private Fund Advisers from Investment Adviser Registration.
December 8, 2010 FINANCIAL MARKETS UPDATE SEC Proposes Rules Exempting Certain Private Fund Advisers from Investment Adviser Registration The Securities and Exchange Commission (the SEC ) has published
More informationMutual Fund Directors
ICI Investor Awareness Series Understanding the Role of Mutual Fund Directors INVESTMENT COMPANY INSTITUTE Understanding the Role of Mutual Fund Directors Protecting Investors...........................................3
More informationClosed-end Fund IPOs Edward S. O Neal, PhD 1
Closed-end Fund IPOs Edward S. O Neal, PhD 1 A closed-end mutual fund is an investment company that in concept is similar to an open-end mutual fund. The big difference is that closed-end funds are traded
More informationan investor-centric approach nontraditional indexing evolves
FLEXIBLE INDEXING Shundrawn A. Thomas Executive Vice President Head of Funds and Managed Accounts Group The opinions expressed herein are those of the author and do not necessarily represent the views
More informationMutual Funds and Other Investment Companies
Mutual Funds and Other Investment Companies Investment Companies Pool funds of individual investors and invest in a wide range of securities or other assets. pooling of assets Provide several functions
More informationMandatory and contract based ownership disclosure
Unidroit Conference The Law of Securities Trading in Emerging Markets Mandatory and contract based ownership disclosure Prof. Luca Enriques Commissioner, CONSOB Rome, 6 7 September 2010 Disclaimer Opinions
More informationA Study of information asymmetry using Bid-Ask spread on firm value: evidence from Tehran Stock Exchange
International Research Journal of Applied and Basic Sciences 2013 Available online at www.irjabs.com ISSN 2251-838X / Vol, 4 (9): 2872-2876 Science Explorer Publications A Study of information asymmetry
More informationWEATHERSTORM FORENSIC ACCOUNTING LONG-SHORT INDEX. External Index Methodology Document
WEATHERSTORM FORENSIC ACCOUNTING LONG-SHORT INDEX External Index Methodology Document 6/18/2015 CONTENTS 1 Index Overview... 2 2 Index Construction Methodology... 2 2.1 Index Constitution... 2 2.2 Universe
More informationSpeech at the annual press conference on the 2010 financial year Bonn, February 25, 2011
The spoken word shall prevail Speech at the annual press conference on the 2010 financial year Bonn, February 25, 2011 Timotheus Höttges Chief Financial Officer Deutsche Telekom AG Thank you, René Obermann!
More informationPros and Cons of Different Investment Options
Pros and Cons of Different Investment Options In 2016, new legislation called CRM2 will come to Canada. Once enacted, all financial institutions in Canada will be required to disclose all investment management
More informationSources of finance (Or where can we get money from?)
Sources of finance (Or where can we get money from?) Why do we need finance? 1. Setting up a business 2. Need to finance our day-to-day activities 3. Expansion 4. Research into new products 5. Special
More information