The Impact of Corporate Governance on Firm Valuation in Financial Markets

Abstract

This paper aims to examine the impact of corporate governance practices on firm valuation in financial markets, exploring how governance quality influences market perception and investor confidence. The study focuses on the relationship between specific governance mechanisms—such as board structure, transparency, and shareholder rights—and their effect on firm valuation metrics. This paper synthesizes findings from empirical studies and theoretical models published in finance and corporate governance literature The findings underscore the importance of robust governance practices for firms seeking to enhance their market valuation and attract long-term investment. Practically, the study provides insights for policymakers on the need to strengthen governance regulations, particularly in emerging markets. Socially, the research suggests that enhanced governance fosters greater accountability, contributing to market stability and protecting stakeholders’ interests. This paper adds to the limited body of research focusing on the valuation effects of governance in a cross-market context, offering a comprehensive overview of governance mechanisms and their impact on financial markets. It provides a valuable reference for future research on corporate governance and firm performance.