Corporate Governance Best Practice and Stock Performance: Case of CEE
Julia Bistrova, Natalja Lace
Corporate governance (CG) becomes a very essential factor to
consider prior to investing in the company. A number of studies
proved its importance on the developed equity markets.
However, intuitively corporate governance should gain more
importance due to high degree of uncertainty because of the
unstable environment. In order to assess the influence of
corporate governance quality on Central and Eastern European
companies‟ stock performance, the CG assessment model,
which includes 21 evaluation criteria, was developed. Based on
the model rating, the companies with the highest CG quality
(top 25%) outperformed companies with the worst CG quality
(bottom 25%) by 0.98% on a monthly basis during the period of
2008 - 2010. Study demonstrate that companies with good CG
quality are able to offer lower risk.