External corporate governance and performance: evidence from the Nordic countries

We examine the influence of anti-takeover provisions on valuation, stock return and operating performance using data from an extensive sample of publicly listed Nordic companies during the time period of 1999-2004 (similar to Gompers, Ishii, and Metrick 2003 [Corporate governance and equity prices. The Quarterly Journal of Economics 118: 107-55] in the US). We collected data from nine of the most commonly used provisions. The results suggest that anti-takeover provisions have a negative impact on valuation, no effect on stock return, and a positive influence on operating performance. Analysing the influence of each reveals dual-class stock to be the single most important provision dummy contributing to the negative valuation, though the discount decreases over the years.