Governance Mechanisms and Corporate Disclosure

Hauswald, Robert; Marquez, Robert

doi:10.2139/ssrn.890360

Cited by 4 publications

(4 citation statements)

References 39 publications

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…It is widely accepted that corporate governance is an important factor in financial market development, firm value, the concentration of ownership and many other different aspects of firm performance. 2 Hauswald and Marquez (2006) provided one of the most recent studies on these specific issues, presenting a theoretical model in which it was argued that by promoting greater transparency, firms' disclosure policies fostered external scrutiny, and thus increased activity in the market for corporate control. There have, nevertheless, been very few studies which have set out with the overall aim of investigating the impact of corporate governance on the equity liquidity of firms.…”

Section: Corporate Governance and Market Liquiditymentioning

confidence: 99%

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Corporate Governance and Equity Liquidity: analysis of S&P transparency and disclosure rankings

Chen

Chung

Lee

et al. 2007

Corporate Governance

114

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This paper sets out to investigate the effects of disclosure, and other corporate governance mechanisms, on equity liquidity, arguing that those companies adopting poor information transparency and disclosure practices will experience serious information asymmetry. Since poor corporate governance leads to greater information asymmetry, liquidity providers will incur relatively higher adverse information risks and will therefore offer higher information asymmetry components in their effective bid-ask spreads. The Transparency and Disclosure (T&D) rankings of the individual stocks on the S&P 500 index are employed to examine whether firms with greater T&D rankings have lower information asymmetry components and lower stock spreads. Our results reveal that the economic costs of equity liquidity, i.e. the effective spread and the quoted half-spread, are greater for those companies with poor information transparency and disclosure practices. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Corporate Governance and Market Liquiditymentioning

confidence: 99%

Corporate Governance and Equity Liquidity: analysis of S&P transparency and disclosure rankings

Chen

Chung

Lee

et al. 2007

Corporate Governance

114

View full text Add to dashboard Cite

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“…In contrast to Lemma 4, when γ < 1, for any level of CEO power, lowering formal pay tightens both the constraints (22) and (23). To a less powerful CEO (with V < V * 1 ) the board pays a fixed wage that is just incentive compatible and to a more powerful CEO (with V ≥ V * 1 ) the board has to pay a higher wage to meet his individual rationality constraint.…”

Section: Implementing High Effortmentioning

confidence: 84%

“…That is, one of the constraints (22) and (23) (23) does not bind. Thus, we can derive the wage w H given in (25).…”

Section: Proof Of Lemmamentioning

confidence: 99%

CEO Power, Compensation, and Governance

Albuquerque

Miao

2007

SSRN Journal

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This paper presents a contracting model of governance based on the premise that CEOs are the main promoters of governance change. CEOs use their power to extract higher pay or private benefits, and different governance structures are preferred by different CEOs as they favor one or the other type of compensation. The model explains why good countrywide investor protection breeds good firm governance and predicts a "race to the top" in firm-governance quality after the Sarbanes-Oxley Act. However, such governance changes may be associated with higher rather than lower CEO pay as CEOs substitute away from private benefits. The model also provides an explanation for the observed correlation of CEO pay and firm governance as driven by CEO power.JEL Classification: G34, J33, K00.

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