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Research Seminar Series - The Corporate Governance–Performance Puzzle: New Insights

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START DATE 28 March 2018

Oasis Theatre, Block 16

END DATE 28 March 2018

We are pleased to invite you to Wednesday’s research seminar. It will be held on Wednesday 28th March, from 4pm, at Middlesex University Dubai in the Oasis Theatre, Block 16, Knowledge Park. The Research Seminar Series was launched in 2008, and has featured more than 220 presentations to date. The seminars provide a forum for researchers to share their work. Presenters include faculty from Middlesex University Dubai and other universities in the United Arab Emirates, as well as researchers from other global institutions. This week’s presentation is:

The Corporate Governance–Performance Puzzle: New Insights

Mohammed Zakriya and Ariadna Dumitrescu

ESADE Business School, Ramon Llull University


This paper presents “nG (new Governance) Index”, an unequal weighted measure of corporate governance that dynamically captures the heterogeneity of its individual anti-takeover components, as an alternative to equal weighted G-Index, E-Index and Gov-Score proposed in the related literature. Our findings show that all anti-takeover provisions do not equally influence firms' corporate governance quality and therefore, our proposed nG-Index traces governance – performance relationship more persistently than an equal-weighted measure. Further analysis reveals that an nG-Index based zero-investment hedge, going long on poor governance portfolio and shorting the good governance one, would have generated an abnormal return of over 1.33% per month or about 16% per year. This hedge is completely opposite to the long good governance – short poor governance strategy suggested in prior literature. We posit that such hedge reversal is an indication that, in recent years, investors underreact to good governance signals and/or seek compensation for high riskiness associated with poorly governed firms.


Mohammed Zakriya (Zack), is currently a Ph.D. candidate in Management Sciences and Student President of ESADE Doctoral Society at ESADE Business School (Ramon Llull University), Barcelona. He is currently working on empirically testing investor behavior towards firms' governance structures. His research broadly focuses on the interplay between corporate policies (through the lens of corporate finance theories) and the stock prices (using multiple asset pricing models). He has presented his research in several conferences and seminars across the globe including FMCG 2017 Conference, Wellington, New Zealand; Multinational Finance Society Annual Conference 2017, Bucharest Romania; and 25th Finance Forum of Spanish Finance Association.

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