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Title: Stock co-movement and governance bundles: Does the quality of national governance moderate this relationship?
Authors: Egwuonwu, A
Lodh, S
Nandy, M
Keywords: board monitoring;governance bundle;national governance quality;incentive alignment;stock co‐movement
Issue Date: 5-Feb-2021
Publisher: Wiley
Citation: Egwuonwu, A., Lodh, S. and Nandy, M. (2021) 'Stock co‐movement and governance bundles: Does the quality of national governance moderate this relationship?', International Journal of Finance and Economics, 28 (3), pp. 2530-2548. doi: 10.1002/ijfe.2548.
Abstract: In this study, we examine if corporate governance, as a bundle, can better explain stock co-movement. To test the implication of governance bundles on stock co-movement, we consider a monitoring and incentive alignment bundle. Using 2,659 firm-year observations from 321 firms listed on the S&P 500 from 2009 to 2017, we find that the governance mechanism bundle can enhance the ability of stock prices to integrate better firm-specific information, which reflects on stock co-movement. In addition, we find the existence of a complementary relationship between National Governance Quality and a firm's board monitoring. This also helps in explaining the puzzle of stock co-movement. The findings will extend the understanding about the co-movement-related literature mentioned in the corporate governance and corporate finance research. The findings are also helpful for decision makers and policy makers involved in the efficient controlling of stock co-movement.
Description: Data Availability Statement: The data that support the findings of this study are available from the corresponding author upon reasonable request.
ISSN: 1076-9307
Appears in Collections:Brunel Business School Research Papers

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