The evolution of corporate governance and agency control: the effectiveness of mechanisms in creating value for companies with IPO on the Brazilian stock exchange
- 17 February 2021
- journal article
- research article
- Published by Emerald in Corporate Governance: The international journal of business in society
- Vol. 21 (5), 775-814
- https://doi.org/10.1108/cg-11-2019-0355
Abstract
From the agency theory’s point of view, this paper aims to analyze corporate governance mechanisms about the characteristics of the companies quoted in the segments Bovespa Mais and Bovespa Mais 2 and their influence on the creation of value in preparation for the opening of the initial public offering (IPO). A quantitative approach was adopted to achieve the proposed objective using the panel data with fixed effects and secondary data collected on the Comissão de Valores Mobiliários website, using statistical software Stata® 13.0 for statistical tests. The population comprises non-financial companies belonging to the Bovespa Mais and Bovespa Mais Level 2 groups, as the survey sample took into account the period of adhesion of the companies, totaled in 15 companies, which cover the period from 2008 to 2019. The selected variables correspond to the ownership structure’s characteristics, then the board’s composition and the fiscal council as the body responsible for supervising the administrators’ acts. The main results indicate that the number of independent members on the board of directors and the supervisory board’s participation positively influence market performance. However, it also reveals that the concentration of ownership brings fundraising for other companies’ acquisitions, risk reduction concerning information asymmetry between investing powers. The main results indicate that the number of independent members on the board of directors and the supervisory board’s participation positively influence market performance. Despite this, it also reveals that the concentration of ownership brings fundraising for other companies’ acquisitions, risk reduction concerning information asymmetry between investing powers. This paper advances a comparative institutional perspective to explain capital market choice by firms making an IPO in a foreign market. This paper finds that internal governance characteristics (founder-chief executive officer, executive incentives and board independence) and external network characteristics (prestigious underwriters, degree of venture capitalist syndication and board interlocks) are significant predictors of foreign capital market choice by foreign IPO firms. While product market choices have been central to strategy formulation for firms in the past, financial markets’ integration makes capital markets an equally crucial strategic decision. This paper advances a comparative institutional perspective to explain capital market choice by firms making an IPO in a foreign market. This situation generates value to shareholders and is perceived by the market and, ultimately, generates a direct relationship with the market performance of companies. While product market choices have been central to strategy formulation for firms in the past, financial markets’ integration makes capital markets an equally major strategic decision.Keywords
This publication has 174 references indexed in Scilit:
- Management of the IPO performance in ThailandJournal of Multinational Financial Management, 2013
- A Behavioral Theory of Corporate Governance: Explicating the Mechanisms of Socially Situated and Socially Constituted AgencyAcademy of Management Annals, 2013
- Internal corporate governance, CEO turnover, and earnings managementJournal of Financial Economics, 2012
- Boardroom Diversity and its Effect on Social Performance: Conceptualization and Empirical EvidenceJournal of Business Ethics, 2012
- Governance Problems in Closely Held CorporationsJournal of Financial and Quantitative Analysis, 2011
- Integration of Micro and Macro Studies in Governance Research: CEO Duality, Board Composition, and Financial PerformanceJournal of Management, 2010
- Internal and External Supervisory Mechanisms in Corporate GovernanceSouth East European Journal of Economics and Business, 2009
- The Evolution of Corporate Ownership after IPO: The Impact of Investor ProtectionThe Review of Financial Studies, 2009
- Determinants of firm level governance: Malaysian evidenceCorporate Governance: The international journal of business in society, 2007
- Hot Markets, Investor Sentiment, and IPO Pricing*The Journal of Business, 2006