The effect of shareholder rights on stock return of US companies

Abstract

Corporate governance in America companies becomes a big issue. Strong shareholder rights highly related to significant stock market exceptional performance. The purpose of this paper is investigating whether shareholder rights in corporate governance are associated with a total stock return for Nasdaq’s listed companies in America during 2018. The share prices of 101 American companies as samples are taken from Nasdaq’s. The other variables (EPS, D/E, ROA) are collected from companies’ financial statements during 2018. Shareholder rights score is gathered From Institutional Shareholder Services (ISS). For statistical modeling, linear regression analysis is used to examine the associations between dependent variable (stock return) and independent variables (EPS, D/E, ROA, shareholder rights score). This paper gets the result that companies with strong shareholder rights have a significant positive impact on stock prices. This paper can suggest firm managers improve their corporate governance since its suggestive effect on firms’ stock returns.