Corporate Governance and Market Valuation: A Study of PPCI Index

The Asian financial crisis has rekindled worldwide interest on the issue of corporate governance. In recent years, pushing for higher governance standard ha s become a regular campaign, with the participation of an increasing number of parties: academics, media, regularity authorities, corporations, institutional investors, international organization etc. newly initiatives has also been proposed by Asian countries their corporate governance practice, e.g., new listing/disclosure, mandatory training, for board of directors, enforced codes of governance etc. international organization are also very keen on governance issues. The International Monetary Fund, Private Companies are calling for sweeping reforms of Governance practice in emerging economies. To improve Corporate Governance the Singapore Stock Exchange obviously has an important role to play. It should strengthen laws share holder interest and beef up the enforcement of such laws and regulations. It is also important for the firms listed in Singapore Stock Exchange to take action on voluntary basis. The question, however, is: Do the firms listed in SSE have incentives to do so? This depends on the answer to the next question: Does the firm’s listed in Singapore Stock Exchange Corporate Governance practice have a positive effect in its market value? If the answer is yes, then firms will have incentives improve their Governance, because by doing so, they increase their market value and reduced their future cost of investment. This study attempts to answer this question empirically.