Corporate governance and firm value during a financial crisis |
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Authors: | Sidney Leung Bertrand Horwitz |
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Institution: | (1) Department of Accountancy, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong;(2) School of Management, Binghamton University (SUNY), SUNY Binghamton, NY, USA |
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Abstract: | The main purpose of this paper is to evaluate the effects of management ownership and other corporate governance variables
on Hong Kong firms’ stock performance following the onset of the Asian Financial Crisis (1997–98). Our results show that Hong
Kong firms with a more concentrated management (executive board) ownership displayed better capital market performance during
the 13-month period of the Crisis. We also find that firms with more equity ownership by non-executive directors, and in which
the positions of CEO and board chairperson were occupied by the same individual experienced a smaller stock price decline.
Our findings are consistent with the notion that there is a greater alignment of insiders with outside owners, rather than
the expropriation by insiders who have the opportunity to divert value, for firms with higher levels of management ownership
during an unexpected capital market crisis. |
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Keywords: | |
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