Corporate Governance Index, Firm Valuation and Performance in Brazil

By A. Silva, Ricardo Pereira Câmara Leal. 2005

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This study investigates the relationship between the quality of a firms corporate governance practices and its valuation and performance, through the construction of a broad firm-specific corporate governance index for Brazilian listed companies. The empirical results indicate a high degree of ownership and control concentration. We can also note a significant difference between the voting and total capital owned by the largest shareholders, mainly through the existence of non-voting shares. Panel data results indicate that less than 4% of Brazilian firms have good corporate governance practices, and that firms with better corporate governance have significantly higher performance (return on assets). There is also positive relationship between Tobin’s Q and better corporate governance practices although the results are not statistically significant.

Subfields: Accounting, Organizational Behavior and Human Resource Management

View Paper: https://www.semanticscholar.org/paper/a7927f639f98e716e947f4e23e342ab3b1ad8c4d