Does Corporate Governance Predict Firms’ Market Values?

With the continuous development of corporate governance practices, corporate governance requirements by many individuals and organizations, such as the participation of investors, listed companies and the government, etc. Since90s, many scholars have the subjective requirements of corporate governance and institutional research must be focused on the evaluation of corporate governance. Many factors that affect the company’s market value, corporate governance is the factors cannot be ignored, but largely played a decisive factor, whether a company can improve its corporate governance practices and increase its stock market value. Studies have shown that corporate governance is very important, is likely to be explain the market value of the Chinese listed companies.In this paper from2008to2010, nankai senior corporate governance evaluation system to evaluate index before100index of good governance, corporate governance of Chinese listed corporate governance could predict the company’s market value by theoretical deduction and empirical research. Empirical study concludes that the total corporate governance index and there is significant positive correlation between tobin Q, managers governance index and tobin Q have significant positive correlation, and robustness test; And shareholder governance, the board of directors governance index, index of supervisory board governance, information disclosure there is no significant relationship between governance index and tobin Q. Control variable leverage and firm size are validated by robustness, have showed significant negative correlation.Corporate governance under the endogenous effects can actually predict market value, this paper studies the empirical results of the inspection. Instrumental variable regression results show that corporate governance index every increase1unit, the company’s market value tobin Q will increase by about5%a unit; Financial leverage tobin Q didn’t reduce a unit will increase about12%units; Assets each reduced by1unit, tobin Q increases about26%. Based on the theoretical analysis and empirical research confirms this paper research and the relevant conclusions, to corporate governance, investor and government and other stakeholders to provide evidence.