Paper: SSRN 311275

Abstract

We report strong OLS and instrumental variable evidence that an overall corporate governance index is an important and likely causal factor in explaining

Complexity vs Empirical Score

  • Math Complexity: 2.0/10
  • Empirical Rigor: 7.0/10
  • Quadrant: Street Traders — practical and empirical, lighter on theory

Why this score: The paper primarily uses OLS and instrumental variable (IV) regression methods without advanced mathematical derivations, placing math complexity at a low level. However, it demonstrates high empirical rigor with a clear backtest-ready design, including a proprietary index (KCGI), instrumental variables based on Korean legal rules, and sensitivity checks on market value metrics.

Research Flowchart

  flowchart TD
  A["Research Question: Does Corporate Governance<br>predict Korean firms' market value?"]
  A --> B["Data & Inputs<br>Firm-level governance & value data from Korea"]
  B --> C["Methodology: Core Analysis"]
  C --> D["OLS Regression<br>Initial association estimates"]
  C --> E["Instrumental Variables<br>Address endogeneity, estimate causal effect"]
  D & E --> F["Key Findings<br>Governance index significantly explains<br>and likely causes higher firm value"]