The evolution of corporate governance and agency control: the effectiveness of mechanisms in creating value for companies with IPO on the Brazilian stock exchange

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Francisco Elder Escossio de Barros ◽  
Ruan Carlos dos Santos ◽  
Lidinei Eder Orso ◽  
Antonia Márcia Rodrigues Sousa
Keyword(s):  
Financial Markets ◽  
Capital Market ◽  
Market Performance ◽  
Foreign Market ◽  
Strategic Decision ◽  
Strategy Formulation ◽  
Institutional Perspective ◽  
Content Type ◽  
Market Choice ◽  
The Board Of Directors

Purpose 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). Design/methodology/approach 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. Findings 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. Research limitations/implications 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. Practical implications 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. Social implications 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. Originality/value 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.

scholarly journals The future of financial markets and regulation: what strategy for Europe?

foresight ◽  
2014 ◽  
Vol 16 (2) ◽  
pp. 95-108 ◽  
Author(s):  
Jean-Baptiste Gossé ◽  
Dominique Plihon
Keyword(s):  
Financial Markets ◽  
Capital Market ◽  
Financial Stability ◽  
Design Methodology ◽  
Financial Integration ◽  
Content Type ◽  
Realistic Option ◽  
The Future ◽  
Unstable Environment ◽  
Insight Into

Purpose – This article aims to provide insight into the future of financial markets and regulation in order to define what would be the best strategy for Europe. Design/methodology/approach – First the authors define the potential changes in financial markets and then the tools available for the regulator to tame them. Finally, they build five scenarios according to the main evolutions observed on the financial markets and on the tools used by the regulator to modify these trends. Findings – Among the five scenarios defined, two present highly unstable features since the regulator refuses to choose between financial opening and independently determining how to regulate finance in order to preserve financial stability. Three of them achieve financial stability. However, they are more or less efficient or feasible. In terms of market efficiency, the multi-polar scenario is the best and the fragmentation scenario is the worst, since gains of integration depend on the size of the new capital market. Regarding sovereignty of regulation, fragmentation is the best scenario and the multi-polar scenario is the worst, because it necessitates coordination at the global level which implies moving further away from respective national preferences. However, the more realistic option seems to be the regionalisation scenario: this level of coordination seems much more realistic than the global one; the market should be of sufficient size to enjoy substantial benefits of integration. Nevertheless, the “European government” might gradually increase the degree of financial integration outside Europe in line with the degree of cooperation with the rest of the world. Originality/value – Foresight studies on financial markets and regulation are quite rare. This may be explained by the difficulty to forecast what will be their evolution in the coming decades, not least because finance is fundamentally unstable. This paper provides a framework to consider what could be the best strategy of regulators in such an unstable environment.

Board performance and its relation to dividend payout: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ravichandran Subramaniam ◽  
Mahenthiran Sakthi
Keyword(s):  
Board Of Directors ◽  
Capital Market ◽  
Performance Measure ◽  
Corporate Boards ◽  
Minority Shareholders ◽  
Dividend Payout ◽  
Content Type ◽  
Return On Capital ◽  
The Board Of Directors ◽  
Board Performance

PurposeTo examine the board of directors’ performance and if higher performance helps protect minority shareholders in an emerging capital market. Additionally, we determine if the different types of company ownership moderate the level of protection to minority shareholders.Design/methodology/approachThe study develops a measure of board performance with their compensation. And it tests its association with the dividend payout decision of 300 of the largest Malaysian public listed companies (referred to as PLCs) over the period 2008 to 2014.FindingsThe results find that higher board productivity in terms of return on capital employed is associated with higher dividend payout. Additionally, the study finds that the board performance measure interacts with race, ethnicity and gender of the board of directors and CEO duality to affect the dividend payout decision of Malaysian PLCs.Research limitations/implicationsIt is a single-country study of large Malaysian PLCs. And it uses only the governance mechanisms that have been shown in emerging capital markets to have the most significant effect on affecting the relationship between board performance and dividend payout.Practical implicationsThe findings show the importance of inclusivity and diversity in governing State-controlled firms in an emerging capital market.Originality/valueThe findings suggest improving corporate boards’ performance, protecting minority shareholders and contributing to the corporate governance literature. Notably, the study highlights boardroom diversity’s importance to enhance the boards of State-controlled firms’ performance.

Diversification strategies and equity market performances

2019 ◽  
Vol 29 (3) ◽  
pp. 207-225 ◽  
Author(s):  
Burhan F. Yavas ◽  
Kathleen Grave ◽  
Demosthenes Vardiabasis
Keyword(s):  
Capital Markets ◽  
Capital Market ◽  
Direct Investment ◽  
Multinational Enterprises ◽  
Equity Market ◽  
Strategic Decision ◽  
Target Market ◽  
Risk And Uncertainty ◽  
Market Returns ◽  
Content Type

Purpose This paper aims to investigate the linkages among foreign direct investment (FDI – greenfield and mergers and acquisitions [M&A]) decisions and equity market returns and volatilities. The main premise is that FDI decisions by multinational enterprises (MNE) are influenced by risk and uncertainty indicated by equity market returns and volatilities in the destination (host) countries. This is so because the events on the stock markets in general and their volatilities in particular signal the vitality of the investment climate of the target market. Understanding volatility in capital markets is important for determining the cost of capital and for evaluating direct investment and asset allocation decisions. Design/methodology/approach Surveys and structured interviews were conducted with senior managers of 11 MNEs based in the USA to collect the data used in this study from November 2017 to October 2018. The paper investigates if FDI decisions of the MNE managers are influenced by risk and uncertainty indicated by equity market returns and volatilities. The paper endeavors to make a contribution to the IB literature in highlighting the role played by equity returns and volatilities in FDI decisions and therewith attempts to integrate finance (capital markets) with international business/strategic decision-making. Findings Capital market performances (returns and volatilities) were found to influence the country choice for location of production facilities (FDI – both greenfield and M&A decisions) as well as timing of the FDI by a MNE. In other words, the share of production capacity optimally located abroad and M&A activities are affected by capital market returns and volatilities.

Healthcare strategic management and the resource based view

2014 ◽  
Vol 7 (3) ◽  
pp. 251-264 ◽  
Author(s):  
Bita Arbab Kash ◽  
Aaron Spaulding ◽  
Larry D. Gamm ◽  
Christopher E. Johnson
Keyword(s):  
Strategic Management ◽  
Health Systems ◽  
Strategic Change ◽  
Strategic Decision ◽  
Comparative Case Study ◽  
Strategy Formulation ◽  
Resource Based View ◽  
Content Type ◽  
Strategic Initiatives

Purpose – The purpose of this paper is to examine how two large health systems formulate and implement strategy with a specific focus on differences and similarities in the nature of strategic initiatives across systems. The aim is to gain a better understanding of the role of resource dependency theory (RDT) and resource based view (RBV) in healthcare strategic management. Design/methodology/approach – A comparative case study design is used to describe, categorize and compare strategic change initiatives within a children's health and a multi-hospital system located in two competitive metropolitan markets. A total of 61 in-person semi-structured interviews with healthcare administrators were conducted during 2009. Summary statistics and qualitative content analysis were employed to examine strategic initiatives. Findings – The two health systems have as their top initiatives very similar pursuits, thus indicating that both utilize an externally oriented RDT method of strategy formulation. The relevance of the RBV becomes apparent during resource deployment for strategy implementation. The process of healthcare strategic decision-making incorporates RDT and RBV as separate and compatible activities that are sequential. Research limitations/implications – Results from this comparative case study are based on only two health systems. Further, the RBV perspective only takes managerial resources and time into consideration. Practical implications – Given that external resources are likely to become more constrained, it is important that hospitals leverage relevant internal resources, in the identification of competitive advantages and effective execution of strategic initiatives. Originality/value – The author propose a refined healthcare strategic management framework that takes both RDT and RBV into consideration by systematically linking strategy formulation with deployment of resources.

A speculation of the presence of overlap and niches in organizational performance management systems

2013 ◽  
Vol 62 (4) ◽  
pp. 364-386 ◽  
Author(s):  
Suwit Srimai ◽  
Chris S. Wright ◽  
Jack Radford
Keyword(s):  
Organizational Performance ◽  
Performance Management ◽  
Niche Overlap ◽  
Strategic Decision ◽  
Strategic Learning ◽  
Strategy Formulation ◽  
Content Type ◽  
Performance Management Systems ◽  
Implementation Processes ◽  
Broad Array

PurposeThe purpose of this paper is to consider the presence and consequences of functional overlap in organizational performance management (PM) systems.Design/methodology/approachThis paper is speculative in that it considers the consequences of organizations applying multiple PM systems. Four widely‐used PM systems from various management perspectives are selected as proxies to demonstrate that overlap can occur across a broad array of extant PM systems. The content of the selected PM systems literature was used for analysis.FindingsThe analysis found evidence of substantial functional overlap among the selected PM systems. Significant niche overlap occurred in the functions: assisting strategy formulation and implementation processes; supporting strategic decision making; and facilitating strategic learning.Practical implicationsThis study and its findings should help scholars to reframe their understanding of PM systems and let managers recognize and take action to optimize the benefits and costs of functional overlap.Originality/valueThe paper identifies functional overlap; a concept not explicitly addressed in the PM literature.

Subnational institutions and EMNE acquisitions in advanced economies: institutional escapism or fostering?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rishika Nayyar ◽  
Shameen Prashantham
Keyword(s):  
Multinational Enterprises ◽  
Emerging Market ◽  
Foreign Market ◽  
Firm Level ◽  
Indian States ◽  
Content Type ◽  
Market Choice ◽  
Advanced Economies ◽  
Institutional Influences ◽  
Socioeconomic Consequences

Purpose The purpose of this paper is to examine whether subnational market-supporting institutions in Indian states affect the likelihood of Indian multinational enterprises (MNEs) to undertake acquisitions in advanced economies (AEs) rather than emerging economies (EEs) and, if so, which mechanism – institutional fostering or escapism – underlies the phenomenon. Design/methodology/approach The paper uses a logistic regression model on a dataset of 647 firm-level cross-border acquisitions (CBAs) undertaken by Indian MNEs during the period 2010–2016. Findings The paper finds support for the institutional escapism mechanism, as opposed to the institutional fostering mechanism, underlying Indian MNEs’ acquisitions in AEs (rather than EEs). That is, firms headquartered in Indian states where market-supporting institutions (such as economic liberalization and efficiency of legal systems) are weak are more likely to undertake CBAs in AEs than in EEs as an escapist response to weak subnational institutions at home. Originality/value The paper highlights the relevance of the mainstream international business (IB) concept of emerging market multinational enterprises (EMNEs) internationalization to critical IB scholarship by examining subnational institutional influences on EMNEs’ foreign market choice between AEs and EEs. In particular, by providing evidence for the institutional escapism mechanism which has potential negative socioeconomic consequences in the region of the investing firm, the paper adds to critical IB research which places great emphasis on the examination of inequalities and draws attention to the EMNE context as a suitable setting for further research on internationalization from a critical perspective.

scholarly journals Understanding strategic decision-making through a multi-paradigm perspective

2017 ◽  
Vol 7 (1) ◽  
pp. 2-20 ◽  
Author(s):  
Christos Anagnostopoulos ◽  
Terri Byers ◽  
Dimitrios Kolyperas
Keyword(s):  
Decision Making ◽  
Empirical Work ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Strategy Formulation ◽  
Managerial Decision ◽  
Content Type ◽  
Charitable Foundations ◽  
Decision Making Processes ◽  
Corporate Social

Purpose The purpose of this paper is to illustrate the efficacy of using a multi-paradigm perspective to examine the relationship between corporate social responsibility (CSR) and strategic decision-making processes in the context of charitable foundations. Design/methodology/approach This paper integrates and synthesizes the micro-social processes of “assessable transcendence” (Anagnostopoulos et al., 2014) with Whittington’s (2001) perspectives on strategy. “Assessable transcendence” was achieved from the constant comparison of categories developed through an early iterative process in which data collection and analysis occurred during the same period. In all, 32 interviews were conducted among a sample of key managers in the charitable foundations for the first two divisions of English football. Findings The present study illustrates empirically that strategic decision making in charitable foundations does not “seat” neatly in any one of Whittington’s perspectives. On the contrary, this study indicates a great deal of overlap within these perspectives, and suggests that conflicting paradigms should be celebrated rather than viewed as signs of theoretical immaturity. Multi-paradigm approaches can potentially reveal insights into the “mechanics” of managerial decision making that are not easily discernible from a mono-paradigmatic perspective. Originality/value This is the first empirical work that examines CSR in relation to strategy within the context of the English football clubs’ charitable foundations, and does so by employing a multi-paradigm perspective on strategy formulation and implementation.

Entry market choices and post-entry growth patterns among born globals in consumer goods sectors

2018 ◽  
Vol 35 (6) ◽  
pp. 958-980 ◽  
Author(s):  
Byoungho Jin ◽  
Jae-Eun Chung ◽  
Heesoon Yang ◽  
So Won Jeong
Keyword(s):  
Consumer Goods ◽  
Growth Patterns ◽  
Strategic Decision ◽  
Multiple Sources ◽  
Content Type ◽  
Case Research ◽  
Brand Reputation ◽  
Market Choice ◽  
Path Dependent ◽  
Post Entry

Purpose Contrary to the mainstream born global (BG) perspective, some previous studies report the incremental expansion of BGs. In addition, the reasons behind BGs initiating specific steps, if any, and BGs’ entry market choices are still unknown or rather contrasting. This study views that such contrasting findings may be attributed to the contexts in which BGs operate. Within the context of consumer goods BGs, the purpose of this paper is to examine the entry market choices and post-entry growth patterns, and investigate the underlying reasons. Design/methodology/approach This study adopted in-depth historiographic case research from seven Korean BGs in the consumer goods sector that demonstrated success in internationalization. Multiple sources were used to gather data from each case. A total of 14 interviews, approximately two one-on-one interviews per firm, were the major means of data collection. Findings The findings revealed that first entry market choices among BGs functioned largely as attempts at emergent opportunities. However, after the first wave of entry into countries with available selling opportunities, entry market choice became a simultaneous pursuit of strategic markets and emergent selling opportunities. BGs focusing on image-oriented consumer goods appeared more strategic when entering the world’s leading markets to gain brand reputation. The analyses of internationalization processes revealed three patterns, which collectively implied that each move to the next stage came from a strategic decision to solve the problems related to survival and strategic visions for growth. Originality/value One contribution of this paper is the provision of empirical evidence for entry market choices among consumer goods BGs. The findings suggest that BGs’ entry market choices may not be a simple matter of simultaneous expansion to the world’s lead market. Instead, they may comprise more strategic decision. While previous studies have suggested such evolutionary or path-dependent internationalization processes, this study is among the first to reveal specific growth patterns and the possible reasons behind them.

Demographic characteristics of the board of directors’ structure and tax avoidance

2019 ◽  
Vol 46 (2) ◽  
pp. 199-212 ◽  
Author(s):  
Mohammadreza Hoseini ◽  
Mehdi Safari Gerayli ◽  
Hasan Valiyan
Keyword(s):  
Board Of Directors ◽  
Capital Market ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Demographic Characteristics ◽  
Corporate Tax ◽  
Content Type ◽  
The Board Of Directors ◽  
Female Presence ◽  
Different Characteristics

PurposeThe structure of corporate governance, as one of the important elements to be considered based on the different characteristics than other companies, such as women, expertise, tenure and management is different. But two measures for the presence of women in the board of directors and the size of director’s board are considered as corporate content characteristics that can affect corporate tax strategies in avoiding tax or taxes timely pay off. The purpose of this paper is to understand the demographic characteristics of the board of directors structure on the board and tax avoidance in Tehran Stock Exchange (TSE).Design/methodology/approachSample includes the 505 firm-year observations from companies listed on the TSE during the years 2012–2016 and research hypothesis was tested using multivariate regression model based on panel data.FindingsThe results indicate that female presence on the board of directors reduces the corporate tax avoidance. Additionally, firms with a larger size of board of directors are associated with more tax avoidance.Originality/valueThe current study is almost the first study which has been conducted in Iran, so the findings of the study not only extend the extant theoretical literature concerning the tax avoidance in developing countries including emerging capital market of Iran, but also help investors, capital market regulators and accounting standard setters to make informed decisions.

scholarly journals Competitive intelligence and strategy formulation: connecting the dots

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Angelo Cavallo ◽  
Silvia Sanasi ◽  
Antonio Ghezzi ◽  
Andrea Rangone
Keyword(s):  
Design Methodology ◽  
Strategic Decision ◽  
Competitive Intelligence ◽  
Strategy Formulation ◽  
Content Type ◽  
Business Units ◽  
Multiple Case ◽  
Connecting The Dots ◽  
And Diffusion

Purpose This paper aims to examine how competitive intelligence (CI) relates to the strategy formulation process of firms. Design/methodology/approach Due to the novelty of the phenomenon and to the depth of the investigation required to grasp the mechanisms and logics of CI, a multiple case study has been performed related to four companies located in Brazil that adopted CI practices within dedicated business units to inform and support strategic decision-making. Findings The authors provide detailed empirical evidence on the connection and use of CI practices throughout each stage of the strategy formulation process. Moreover, the study suggests that CI practices, despite their strategic relevance and diffusion, are still extensively adopted for tactical use. Originality/value This study sheds light on how CI practices may inform, support, and be integrated in the strategy formulation process, as few studies have done before.

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