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Corporate Governance and Ownership: Measurement and Impact on Corporate Performance and Dividend Policies in Argentina

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  • Ricardo N. Bebczuk

Abstract

The goal of this paper is twofold. First, we assemble, for the first time, quantitative measures of the quality of the corporate governance and the ownership structure of 65 non-financial listed companies in Argentina with information for 2003-2004. A wide array of official and private sources was used for this purpose. In a nutshell, companies seem to be poorly governed vis-à-vis international practices. In turn, ownership appears to be quite concentrated at the level of the largest ultimate shareholder, but separation of control and cash flow rights prevails in less than half of the companies, with pyramiding being the main mechanism for creating such a wedge. Second, we test the predictions of recent theories linking those measures with corporate performance and dividend policy in 2000-2003. In regard to performance, the results point to a sizable and robust effect of our governance measure on both the return on assets and Tobin` q. Moreover, the separation of control and cash flow rights for the largest shareholder -an indicator of incentives to expropriate minority shareholders -hinders performance directly, and also attenuates the beneficial impact of good governance rules. When it comes to dividends, only our governance measure appears to exert a positive and marked effect on the cash dividend-to-cash flow ratio. However, the estimates prove to be fragile to the inclusion of some additional controls correlated to governance.

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Bibliographic Info

Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 3212.

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Date of creation: Nov 2005
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Handle: RePEc:idb:wpaper:3212

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Cited by:
  1. Oskar Kowalewski & Ivan Stetsyuk & Oleksandr Talavera, 2007. "Corporate Governance and Dividend Policy in Poland," Discussion Papers of DIW Berlin 702, DIW Berlin, German Institute for Economic Research.
  2. Roque B. Fernández & Sergio Pernice & Jorge M. Streb, 2007. "Determinants of the development of corporate bond markets in Argentina: One size does not fit all," CEMA Working Papers: Serie Documentos de Trabajo. 348, Universidad del CEMA.
  3. Alberto Chong & Florencio Lopez-de-Silanes, 2007. "Gobierno Corporativo en América Latina," Research Department Publications 4495, Inter-American Development Bank, Research Department.
  4. Fernando Lefort, 2005. "Ownership Structure And Corporate Governance In Latin America," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 8(1), pages 55-84.
  5. Alberto E. Chong & Florencio López-de-Silanes, 2007. "Corporate Governance in Latin America," IDB Publications 6723, Inter-American Development Bank.
  6. Chisari, Omar O. & Ferro, Gustavo, 2009. "Gobierno Corporativo: los problemas, estado actual de la discusión y un ejercicio de medición para Argentina
    [Corporate Governance: the problems, the current stage of the discussion and a measure    ," MPRA Paper 15630, University Library of Munich, Germany.

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