Chen, Y.. C. R., Chang, C. Y., Wang, L. F., and Lee, W. C. 2005. The Ohlson Valuation Framework and Value-Relevance of Corporate Governance: An Empirical Analysis of the Electronic Industry in Taiwan. NTU Management Review, 15 (2): 123-142
Roger C. Y. Chen, Professor, Graduate Institute of Business Management, National Kaohsiung First University of Science and Technology
Chih-Yao Chang, MBA, Department of Finance, National Kaohsiung First University of Science and Technology
Lan-Fen Wang, Lecturer, Department of Accounting, National Taipei University
Wen-Chih Lee, Professor, Graduate Institute of Commerce, National Kaohsiung University of Applied Sciences
Abstract
Previous studies analyze a firm's market value as it relates to financial statements only. This study applies Ohlson's (1995) valuation model to examine the relationship between equity market value and corporate governance features that financial statements cannot reveal. Using a sample of all listed companies in electronic sector trading on the TSE (Taiwan Stock Exchange), this research discusses whether corporate governance affects the value relevance of equity market value. Our findings indicate that the independence and the professionalism of the board of directors can create marginal market value through effective supervision function. Additionally, this research employs the method of model specification test and finds that the inclusion of these corporate governance indicators can enhance the validity of the Ohlson valuation model.
Keywords
Corporate governance Ohlson equity valuation model