Sample Essay

The research proved that shares as held by the large shareholders and being state owned affects the valuation of the stock of a company in a positive manner (Bai, Liu, Lu, Song & Zhang, 2004). The reason for the finding being that the largest shareholder is easier to monitor in order to prevent channelisation of company stocks or resources in a single direction (Bai, Liu & Song, 2004).

Issuing shares ti investors from foreign counterparts also improves the valuation of a company’s market performance since in order to issue such shares transparency plays a vital role, hence, market valuation improves (Bai, Liu, Lu, Song & Zhang, 2004). Having CEO’s as the chairman of the board deteriorates the market valuation of the stocks of a company since having an independent board improves valuation. Going high on the corporate governanceindex (CG Index) improves the market value of a firm. Since a company following the corporate law to its highest extent tends to improve on the market valuation of its stocks (Bai, Liu, Lu, Song & Zhang, 2003). Figure 1 (See Appendix) shows the relationship between a company’s market valuation and the scores of a company on the CG Index.

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Essay: Effect of corporate governance on firm level
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