Value Information of Corporate Decisions and Corporate Governance Practices*

초록

Extant published literature reveals that sound corporate governance practices enhance firm value. However, how it affects firm value remains largely unexplained. This paper addresses this question by providing a direct link between corporate governance practices and strategic corporate decisions, such as investment, financing, dividend policies, and cash holdings. Applying a unique dataset of firm-level corporate governance practices obtained from the Korea Corporate Governance Service in Fama and French's (The Journal of Finance, 53, 1998, 819) framework, corporate governance practices are expected to influence firm value by enhancing value implications of firm-level decisions. Findings show that the value implications of financing, investment, dividend, and cash-holding decisions are strong for firms with sound corporate governance practices.

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