Abstract
This paper utilizes a new data set from AllianceBernstein that, unlike other corporate governance data, has monthly-updated firm-level governance ratings for 21 emerging markets countries for almost a five year period. With these unique data, we examine how changes in corporate governance ratings impact firm valuation. This type of test largely allows us to overcome the issue of whether better governance causes better valuations, or whether firms with better valuations endogenously choose better governance. Using this test we find evidence that improvements in corporate governance result in significantly higher valuations.
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