An empirical investigation of the visible effects of corporate governance: the case of Greece

Abstract

Purpose – To attempt to relate the mean returns and price volatility of a selected sample of 30 companies listed in Athens stock exchange (ATHEX), to the introduction of the legal framework concerning corporate governance. Design/methodology/approach – The essence of this approach is segmenting our whole sample into three subsamples with their key dates being the actual dates on which two legal frameworks related to the corporate governance has been introduced, we perform mean and variance equality tests to assess whether stock market returns and price volatility change, in a statistically significant way, in the three sub-periods. Findings – From our empirical study, it can be concluded that the volatility has been altered both during the sample periods used and the companies for which our methodology has been implemented. Research limitations/implications – Our empirical research can be further extended including a larger sample of companies in order to draw more safe conclusions. In addition, and although our argument for high liquidity for selecting our sample of companies is rational, we believe that our research can be further enriched by first constructing a ranking for all listed companies based on various corporate governance measures. Practical implications – One of the reasons that may have impacted on the volatility may be the introduction of corporate governance; however, other factors may have also resulted to lower volatility, argument that can be further researched in future studies. Originality/value – This paper provides evidence on the relation between volatility and corporate governance. The implication is that the volatility has been altered during the period under investigation.

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