Corporate Governance Indexes: The Confounding Effects of Using Different Measures

Prior empirical research has created and used many different governance indexes with mixed results. However, these different configurations might prove unlikely effects over firm valuation as they differ in configuration, scale and furthermore, in interpretation. To test the effectiveness of different governance indexes configurations, an OLS model and a panel data analysis is applied on a sample of 1.307 firms in the U.S. over three years. The results confirm statistical differences and significance of two different measures of external and internal governance in relation to firm value.