Pricing Corporate Governance
Once upon a time, in the 1990's, investors could out-perform the market by trading solely on firms' anti-takeover provisions. Nowadays, investors have learned to price these provisions - rewarding firms whose managers are exposed to the market for corporate control - but there might be other features of governance on which they could trade profitably.
https://prosyn.org/qTQbcv9
CAMBRIDGE – Do markets appreciate and correctly price the corporate-governance provisions of companies? In new empirical research, Alma Cohen, Charles C.Y. Wang, and I show how stock markets have learned to price anti-takeover provisions. This learning by markets has important implications for both managements of publicly traded companies and their investors.