K.J. Martjin Cremers
Spotlight Research: Thirty Years of Shareholder Rights and Firm Valuation
This paper explores the relationship between shareholder rights and firm valuation.
This research introduces a new hand-collected dataset that tracked restrictions on shareholder rights at approximately 1,000 firms from 1978-1989. In conjunction with 1990-2006 IRRC data, the authors tracked firms’ shareholder rights over thirty years. Most governance changes occurred during the 1980s. The data found a robustly negative association between restrictions on shareholder rights (using the G-Index as a proxy) and Tobin’s Q. The negative association only appears after the judicial approval of antitakeover defenses in the 1985 landmark Delaware Supreme Court decision of Moran v. Household. This decision was an unanticipated, exogenous shock that increased the importance of shareholder rights.
- Aggregate Jump and Volatility Risk in the Cross-Section of Stock Returns, (with Michael Halling, David Weinbaum), forthcoming in Journal of Finance, 2014.
- “Does the Market for CEO Talent Explain Controversial CEO Pay Practices?” (with Yaniv Grinstein), ), forthcoming in the Review of Finance, 2014
- Uncertainty and Valuations (with Hongjun Yan), forthcoming in the Critical Finance Review, 2014
- Should Benchmark Indices Have Alpha? Revisiting Performance Evaluation (with Antti Petajisto and Eric Zitzewitz), forthcoming in the Critical Finance Review, Issue 1, 2013, 1-48.