Corporate governance and stock market duration for South Korea and the USA

In this paper we investigate the hypothesis that international differences in corporate governance systems may be portrayed through measuring the duration of stock markets. Stock market duration provides a means of measuring the average length of time for which investors retain their investment in a country's equity assets. We expect that countries classified as insider-dominated are likely to be characterised by longer stock market durations whereas outsider-dominated economies will have shorter stock market durations. By estimating the stock market duration of South Korea and the USA, we test our hypothesis and find that the USA, an outsider-dominated economy has a significantly shorter stock market duration than South Korea, an insider-dominated economy.