Operating Efficiency and Corporate Governance

• Main Authors: Dybvig, Philip H., WARACHKA, Mitchell Craig
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2010
• Subjects: Finance and Financial Management; Portfolio and Security Analysis
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/1898
• Institution: Singapore Management University

Although empirical studies often use Tobin's Q as a proxy for operating performance, our theoretical framework highlights its ambiguity when evaluating corporate Governance. In particular, capital in the denominator of Tobin's Q is endogenous since entrenched managers can enjoy the quiet l...