Research by CMMU Ph.D. graduate Dr. Visit Phunnarungsi and Assoc. Prof. Dr. Roy Kouwenberg on corporate governance has been accepted for publication in the Pacific Basin Finance Journal (indexed in Scopus and the Social Science Citation Index). The paper is titled “Corporate Governance, Violations and Market Reactions”.
The research tests the relation between firm-level corporate governance and the market reaction to announcements of violations of rules and regulations by firms listed on the stock exchange of Thailand. The main finding is that there is no significant difference in market reaction when firms with high and low governance scores commit violations, suggesting the market does not attach value to governance policies. However, the market reacts negatively when firms with a low past violation record violate the rules. The market reaction is especially strong, -8.1% on average, when firms with low past violations and low governance scores commit violations. The evidence suggests that investors rely on a combination of observed behavior (past violations) and the firm’s formal governance policies to learn about the firm’s true governance practices.
The Pacific Basin Finance Journal publishes high quality empirical and theoretical research on the capital markets of the Asia-Pacific countries, and is ranked in the 2nd quartile of the Scimago journal ranking.
Publication of this report confirms CMMU's status as a leading business school in Asia.