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Portfolio selection: does corporate governance matter?

Naima Lassoued (Associate Professor of Finance, FSEG Mahdia, University of Mounastir, Mahdia, Tunisia)
Ali Elmir (Professor of Finance at the Institut Supérieur de Gestion, University of Tunis, Tunis, Tunisia)

Corporate Governance

ISSN: 1472-0701

Article publication date: 12 October 2012




The purpose of this paper is to examine whether corporate governance has an impact on portfolio selection within the usual mean‐variance framework, the idea being that by reducing agency conflicts, corporate governance increases the value of the firm.


Using a sample of 460 American firms between 1995 and 2004, the authors first determine the optimal mean‐variance portfolio. The authors then test whether governance characteristics explain the optimal portfolio weights.


The results show that the optimal portfolio weights are sensitive to internal control mechanisms, ownership concentration, managerial entrenchment and incentive compensation.


The results are relevant to academicians and investors concerned with portfolio selection. In fact, they underline the importance of including governance characteristics in their portfolio selection.



Lassoued, N. and Elmir, A. (2012), "Portfolio selection: does corporate governance matter?", Corporate Governance, Vol. 12 No. 5, pp. 701-713.



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