Advanced Search
MyIDEAS: Login to save this paper or follow this series

Corporate Valuation and Governance: Evidence from Colombia

Contents:

Author Info

  • Luis H Gutiérrez

    ()

  • Carlos Pombo

    ()

Abstract

We examine for the first time the association of different measures of ownership and control, and separation ratios with firm’s value and performance for 108 non-financial firms that traded their stock during the period 1998 to 2002. We found that large blockholders exert a positive influence upon firm’s valuation and performance, which validates the positive monitoring approach of large shareholders, but also found that this relation is not monotone implying that when separation of control and ownership tends to increase, a negative effect is exerted on firm’s valuation. Furthermore, we report first estimates of a survey of corporate governance practices conducted in 2004 for 43 Colombian non-financial companies. The index’s scores suggest that implementation of good governance in Colombian firms has been slow and poor as measured by the average of the Index that is below half the maximum attainable value. Regrettably, we did not find any support to recent theories that predict a positive association between good governance practices, measured by the CGI, and performance. At most there exists a positive relationship for sub-index but the results were not statistically significant in general.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.urosario.edu.co/FASE1/economia/documentos/pdf/bi71.pdf
Download Restriction: no

Bibliographic Info

Paper provided by UNIVERSIDAD DEL ROSARIO in its series BORRADORES DE INVESTIGACIÓN with number 002203.

as in new window
Length: 59
Date of creation: 01 Jul 2005
Date of revision:
Handle: RePEc:col:000091:002203

Contact details of provider:

Related research

Keywords: Ownership; Control; Corporate Governance; Colombia;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. B. Yurtoglu, 2000. "Ownership, Control and Performance of Turkish Listed Firms," Empirica, Springer, Springer, vol. 27(2), pages 193-222, June.
  2. Prowse, Stephen D, 1992. " The Structure of Corporate Ownership in Japan," Journal of Finance, American Finance Association, American Finance Association, vol. 47(3), pages 1121-40, July.
  3. Rafael La Porta & Florencio Lopez-deSilanes & Andrei Shleifer & Robert W. Vishny, 1999. "Investor Protection and Corporate Valuation," NBER Working Papers 7403, National Bureau of Economic Research, Inc.
  4. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, Elsevier, vol. 20(1-2), pages 293-315, January.
  5. Anup Agrawal & Charles R. Knoeber, . "Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders (Revision of 29-94)," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 8-96, Wharton School Rodney L. White Center for Financial Research.
  6. Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, American Finance Association, vol. 57(6), pages 2741-2771, December.
  7. Ariane Chapelle, 2004. "Separation between ownership and control: where do we stand?," ULB Institutional Repository 2013/9941, ULB -- Universite Libre de Bruxelles.
  8. Carlos Pombo & Luis H Gutierrez & Rodrigo Taborda, 2005. "Ownership and Control in Colombian Corporations," BORRADORES DE INVESTIGACIÓN, UNIVERSIDAD DEL ROSARIO 003311, UNIVERSIDAD DEL ROSARIO.
  9. Clifford G. Holderness, 2003. "A survey of blockholders and corporate control," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Apr, pages 51-64.
  10. Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2002. "Ferreting Out Tunneling: An Application To Indian Business Groups," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 117(1), pages 121-148, February.
  11. Benjamin E. Hermalin & Michael S. Weisbach, 2003. "Boards of directors as an endogenously determined institution: a survey of the economic literature," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Apr, pages 7-26.
  12. Sanford J. Grossman & Oliver D. Hart, 1982. "Corporate Financial Structure and Managerial Incentives," NBER Chapters, in: The Economics of Information and Uncertainty, pages 107-140 National Bureau of Economic Research, Inc.
  13. Bernard S. Black & Hasung Jang & Woochan Kim, 2006. "Does Corporate Governance Predict Firms' Market Values? Evidence from Korea," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 22(2), pages 366-413, October.
  14. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(6), pages 1155-77, December.
  15. Gibson, Michael S., 2003. "Is Corporate Governance Ineffective in Emerging Markets?," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 38(01), pages 231-250, March.
  16. Himmelberg, C.P. & Hubbard, R.G. & Palia, D., 1997. "Understanding the Determinants of Mangerial Ownership and the Link Between Ownership and Performance," Papers 97-21, Columbia - Graduate School of Business.
  17. Paul A. Gompers & Joy L. Ishii & Andrew Metrick, 2002. "Corporate Governance and Equity Prices," Center for Financial Institutions Working Papers, Wharton School Center for Financial Institutions, University of Pennsylvania 02-32, Wharton School Center for Financial Institutions, University of Pennsylvania.
  18. Ariane Chapelle & Ariane Szafarz, 2002. "Ownership and control: dissecting the pyramid," Working Papers CEB, ULB -- Universite Libre de Bruxelles 03-002.RS, ULB -- Universite Libre de Bruxelles.
  19. Walter Novaes, 2003. "Capital Structure Choice When Managers Are in Control: Entrenchment versus Efficiency," The Journal of Business, University of Chicago Press, vol. 76(1), pages 49-82, January.
  20. Klapper, Leora F. & Love, Inessa, 2004. "Corporate governance, investor protection, and performance in emerging markets," Journal of Corporate Finance, Elsevier, Elsevier, vol. 10(5), pages 703-728, November.
  21. Wiwattanakantang, Yupana, 2001. "Controlling Shareholders and Corporate Value: Evidence from Thailand," CEI Working Paper Series, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University 2001-4, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  22. Ghemawat, Pankaj & Khanna, Tarun, 1998. "The Nature of Diversified Business Groups: A Research Design and Two Case Studies," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 46(1), pages 35-61, March.
  23. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, American Finance Association, vol. 54(2), pages 471-517, 04.
  24. Zwiebel, Jeffrey, 1995. "Block Investment and Partial Benefits of Corporate Control," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 62(2), pages 161-85, April.
  25. Kee-Hong Bae & Jun-Koo Kang & Jin-Mo Kim, 2002. "Tunneling or Value Added? Evidence from Mergers by Korean Business Groups," Journal of Finance, American Finance Association, American Finance Association, vol. 57(6), pages 2695-2740, December.
  26. Art Durnev & E. Han Kim, 2005. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," Journal of Finance, American Finance Association, American Finance Association, vol. 60(3), pages 1461-1493, 06.
  27. Carles Gispert, 1998. "Board turnover and firm performance in Spanish companies," Investigaciones Economicas, Fundación SEPI, Fundación SEPI, vol. 22(3), pages 517-536, September.
  28. Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, Elsevier, vol. 7(3), pages 209-233, September.
  29. Becht, Marco & Roell, Ailsa, 1999. "Blockholdings in Europe:: An international comparison1," European Economic Review, Elsevier, Elsevier, vol. 43(4-6), pages 1049-1056, April.
  30. Black, Bernard, 2001. "The corporate governance behavior and market value of Russian firms," Emerging Markets Review, Elsevier, Elsevier, vol. 2(2), pages 89-108, June.
  31. Denis, David J. & Denis, Diane K. & Sarin, Atulya, 1997. "Ownership structure and top executive turnover," Journal of Financial Economics, Elsevier, Elsevier, vol. 45(2), pages 193-221, August.
  32. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages 461-88, June.
  33. Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
  34. Bianco, Magda & Casavola, Paola, 1999. "Italian corporate governance:: Effects on financial structure and firm performance," European Economic Review, Elsevier, Elsevier, vol. 43(4-6), pages 1057-1069, April.
  35. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, American Economic Association, vol. 76(2), pages 323-29, May.
  36. Marco Becht & Ailsa Röell, 1999. "Blockholdings in Europe: an international comparison," ULB Institutional Repository 2013/13316, ULB -- Universite Libre de Bruxelles.
  37. Agrawal, Anup & Knoeber, Charles R., 1996. "Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 31(03), pages 377-397, September.
  38. Denis, Diane K. & McConnell, John J., 2003. "International Corporate Governance," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 38(01), pages 1-36, March.
  39. Wolfgang Drobetz & Andreas Schillhofer & Heinz Zimmermann, 2004. "Corporate Governance and Expected Stock Returns: Evidence from Germany," European Financial Management, European Financial Management Association, European Financial Management Association, vol. 10(2), pages 267-293.
  40. Erik Lehmann & Juergen Weigand, 2000. "Does the Governed Corporation Perform Better? Governance Structures and Corporate Performance in Germany," CoFE Discussion Paper, Center of Finance and Econometrics, University of Konstanz 00-05, Center of Finance and Econometrics, University of Konstanz.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Mauricio A. Hernández M. & Munir A. Jalil B. & Carlos Esteban Posada P., 2007. "El Costo De Los Ciclos Económicos En Colombia: Una Nueva Estimación," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, BANCO DE LA REPÚBLICA - ESPE.
  2. Luis H. Gutiérrez & Carlos Pombo & Rodrigo Taborda, 2005. "Propiedad y control en empresas colombianas," Research Department Publications, Inter-American Development Bank, Research Department 3221, Inter-American Development Bank, Research Department.
  3. Gutierrez, Luis H. & Pombo, Carlos & Taborda, Rodrigo, 2008. "Ownership and control in Colombian corporations," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 48(1), pages 22-47, February.
  4. Fernando Lefort, 2005. "Ownership Structure And Corporate Governance In Latin America," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 8(1), pages 55-84.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:col:000091:002203. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Publicaciones Economía).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.