Corporate Governance and Expected Stock Returns

1. Front Matter

   Pages I-XXII

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2. Introduction and Motivation for the Study

   • Andreas Schillhofer

   Pages 1-4

3. Overview

   • Andreas Schillhofer

   Pages 5-5

4. Theoretical and Conceptual Framework

   • Andreas Schillhofer

   Pages 6-24

5. Governance Mechanisms and Firm Performance

   • Andreas Schillhofer

   Pages 25-59

6. Modeling Governance as a Reward for Risk

   • Andreas Schillhofer

   Pages 60-80

7. Empirical Evidence on the Relationship Between Corporate Governance and Expected Returns on Equity

   • Andreas Schillhofer

   Pages 81-150

8. Conclusions and Outlook

   • Andreas Schillhofer

   Pages 151-155

9. Back Matter

   Pages 157-190

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In the wake of several high profile corporate collapses the discussion about corporate governance has intensified and professional investors have become more conscious of their rights of control in the portfolio companies. Whereas Anglo-American authors have done excellent work on the relationship between corporate governance and firm valuation, there is little empirical evidence on this topic in Germany. But recent works suggest that a stricter legal environment leads to lower expected rates of return in an international cross-section of countries.

Andreas Schillhofer investigates whether differences in firm-specific corporate governance also help to explain expected returns in a cross-section of firms within a single jurisdiction. Based on his Corporate Governance Rating (CGR) for German firms, the author documents a positive relationship between the CGR and firm value. In addition, there is strong evidence that expected returns are negatively correlated with the CGR if dividend yields and price-earnings ratios are used as proxies for the cost of capital.

• Asset Pricing
• Corporate Governance
• Cost of capital
• Governance
• Principal Agent Theory
• Rating
• Unternehmensführung
• Unternehmenskultur

Dr. Andreas Schillhofer promovierte bei Prof. Dr. Heinz Zimmermann am Lehrstuhl für Internationale Unternehmensfinanzierung der Wissenschaftlichen Hochschule für Unternehmensführung (WHU) in Vallendar. Er ist derzeit als Investmentbanker bei Greenhill & Co. in London tätig.

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