Corporate governance rating and financial performance: a Canadian study

Abstract

Purpose

This paper aims to examine whether the corporate governance rankings published by a market information intermediary are reflected in the values that investors accord to firms.

Design/methodology/approach

Panel data from 289 Canadian firms in the four‐year period 2002‐2005 were analyzed using a price model.

Findings

The results suggest that the corporate governance rankings published by the market information intermediary are related to not only firm market value, but also to accounting results.

Practical implications

This study provides empirical observations that would be useful for various organizations involved in the regulation of corporate governance practices and the standardization of relevant data elements.

Originality/value

This study contributes to the literature by demonstrating that information published by an information intermediary is reflected in firm market values. Moreover, this information appears to be related to the accounting results. Thus, good governance rankings are reflected in the accounting results.

Citation

Berthelot, S., Morris, T. and Morrill, C. (2010), "Corporate governance rating and financial performance: a Canadian study", Corporate Governance, Vol. 10 No. 5, pp. 635-646. https://doi.org/10.1108/14720701011085599