How does corporate governace pay off? Evidence from Korean stock listings

Paul Moon Sub Choi, Joung Hwa Choi, Mookyong Son

Research output: Contribution to journalArticlepeer-review


Corporate governance is an envelope for the mechanisms, processes and relations through which corporations are controlled and guided. Consequently, corporate governance affects operational performance and, in turn, stock returns, as Gompers et al. (2003) find. In this research, we use the Korea Corporate Governance Stock Price Index (KOGI) to test a possible linkage between corporate governance and shareholder wealth in Korea. Factor mimicking portfolios sorted per KOGI are constructed to estimate a corporate governance risk factor ("good minus bad"). By augmenting this new factor to the existing factor models (Fama and French, 1993; Carhart, 1997) to fit multiply imputed data, we find evidence that corporate governanceinfluences stock pricing in Korea.

Original languageEnglish
Pages (from-to)225-230
Number of pages6
JournalInvestment Management and Financial Innovations
Issue number4
StatePublished - 2016


  • CG
  • Factor-mimicking portfolio
  • Long-short portfolio
  • Multiple imputation
  • Risk factor


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