Long-Term Investors and Corporate Governange Quality

In this study we analyze impact of long-term investors on the quality of corporate governance. Based on the regression analysis on the sample of 2,180 US based firms we argue that an increase of long-term ownership has positive impact on the quality of corporate governance. Furthermore, the effect is stronger in the companies with more concentrated ownership. While strengthening the quality of corporate governance, long-term investors also positively affect companies’ performance. As indicators of corporate governance quality the following parameters were used: share of independent directors at the board of directors, share of woman in the board of directors, share of independent directors in audit/nomination committee/ share of the company owned by insiders. For determining investors’ investment horizon their portfolio turnover was used. The study includes three chapters: in the first chapter an overview of scientific papers dedicated to various aspects of the topic is provided. In second chapter we provide explanations of all data sources and model specifications that have been used for testing our hypothesis. Finally, in third chapter includes the results of the study with detailed analysis.