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Corporate Governance Policy and Company Performance: The Case of Portugal

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Author Info

  • Carlos Alves

    ()
    (CEMPRE, Faculdade de Economia da Universidade do Porto)

  • Victor Mendes

    ()
    (CMVM – Comissão do Mercado de Valores Mobiliários)

Abstract

Several supervisory authorities and governmental working groups issued recommendations on corporate governance for listed companies during the nineties. In this paper, we used a unique database that allowed us to analyse the relationship between the level of compliance of the recommendations issued by the Portuguese Securities Market Commission and the (abnormal) returns of the concerned companies. By using a multifactor model, one can conclude that there is a positive relationship between the compliance of some of these recommendations and the abnormal returns that were determined. The recommendations on the structure and functioning of the executive board deserve a special attention.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 112.

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Length: 18 pages
Date of creation: Dec 2001
Date of revision:
Handle: RePEc:por:fepwps:112

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Related research

Keywords: Corporate Governance; Performance and Supervision.;

References

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  1. Liew, Jimmy & Vassalou, Maria, 2000. "Can book-to-market, size and momentum be risk factors that predict economic growth?," Journal of Financial Economics, Elsevier, Elsevier, vol. 57(2), pages 221-245, August.
  2. Banz, Rolf W., 1981. "The relationship between return and market value of common stocks," Journal of Financial Economics, Elsevier, Elsevier, vol. 9(1), pages 3-18, March.
  3. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, American Finance Association, vol. 52(2), pages 737-83, June.
  4. Chopra, Navin & Lakonishok, Josef & Ritter, Jay R., 1992. "Measuring abnormal performance : Do stocks overreact?," Journal of Financial Economics, Elsevier, Elsevier, vol. 31(2), pages 235-268, April.
  5. De Bondt, Werner F M & Thaler, Richard, 1985. " Does the Stock Market Overreact?," Journal of Finance, American Finance Association, American Finance Association, vol. 40(3), pages 793-805, July.
  6. Fama, Eugene F & French, Kenneth R, 1988. "Permanent and Temporary Components of Stock Prices," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 96(2), pages 246-73, April.
  7. Yermack, David, 1997. " Good Timing: CEO Stock Option Awards and Company News Announcements," Journal of Finance, American Finance Association, American Finance Association, vol. 52(2), pages 449-76, June.
  8. Shleifer, Andrei & Vishny, Robert W, 1988. "Value Maximization and the Acquisition Process," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 2(1), pages 7-20, Winter.
  9. Conrad, Jennifer & Kaul, Gautam, 1988. "Time-Variation in Expected Returns," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 61(4), pages 409-25, October.
  10. Jegadeesh, Narasimhan & Titman, Sheridan, 1993. " Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency," Journal of Finance, American Finance Association, American Finance Association, vol. 48(1), pages 65-91, March.
  11. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, Morgan Stanley, vol. 22(1), pages 43-58.
  12. Gultekin, Mustafa N. & Gultekin, N. Bulent, 1983. "Stock market seasonality : International Evidence," Journal of Financial Economics, Elsevier, Elsevier, vol. 12(4), pages 469-481, December.
  13. Keim, Donald B., 1983. "Size-related anomalies and stock return seasonality : Further empirical evidence," Journal of Financial Economics, Elsevier, Elsevier, vol. 12(1), pages 13-32, June.
  14. Kang, Jun-Koo & Shivdasani, Anil, 1995. "Firm performance, corporate governance, and top executive turnover in Japan," Journal of Financial Economics, Elsevier, Elsevier, vol. 38(1), pages 29-58, May.
  15. Fama, Eugene F & French, Kenneth R, 1992. " The Cross-Section of Expected Stock Returns," Journal of Finance, American Finance Association, American Finance Association, vol. 47(2), pages 427-65, June.
  16. De Bondt, Werner F M & Thaler, Richard H, 1987. " Further Evidence on Investor Overreaction and Stock Market Seasonalit y," Journal of Finance, American Finance Association, American Finance Association, vol. 42(3), pages 557-81, July.
  17. Barber, Brad M. & Lyon, John D., 1997. "Detecting long-run abnormal stock returns: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, Elsevier, vol. 43(3), pages 341-372, March.
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Citations

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Cited by:
  1. Carlos F. Alves & Victor Mendes, 2006. "Mutual fund flows’ performance reaction: does convexity apply to small markets?," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 204, Universidade do Porto, Faculdade de Economia do Porto.
  2. Rosa Forte, 2004. "The relationship between foreign direct investment and international trade. Substitution or complementarity? A survey," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 140, Universidade do Porto, Faculdade de Economia do Porto.
  3. Jorge M. S. Valente, 2004. "Local and global dominance conditions for the weighted earliness scheduling problem with no idle time," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 156, Universidade do Porto, Faculdade de Economia do Porto.
  4. Sandra Silva, 2009. "On evolutionary technological change and economic growth: Lakatos as a starting point for appraisal," Journal of Evolutionary Economics, Springer, Springer, vol. 19(1), pages 111-135, February.
  5. Carlos Alves & Victor Mendes, 2007. "Are mutual fund investors in jail?," Applied Financial Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(16), pages 1301-1312.
  6. Ana Paula Delgado & Isabel Maria Godinho, 2004. "The evolution of city size distribution in Portugal: 1864-2001," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 151, Universidade do Porto, Faculdade de Economia do Porto.
  7. Carlos F. Alves & Ernesto Fernando R. Vicente, 2012. "Does the Latin Corporate Governance Model perform worse than others in preventing earnings management?," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 447, Universidade do Porto, Faculdade de Economia do Porto.
  8. Maria do Rosario Correia & Scott C. Linn & Andrew Marshall, 2004. "An Empirical Investigation of Debt Contract Design: The Determinants of the Choice of Debt Terms in Eurobond Issues," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 148, Universidade do Porto, Faculdade de Economia do Porto.
  9. Carlos Alves & Victor Mendes, 2011. "Does performance explain mutual fund flows in small markets? The case of Portugal," Portuguese Economic Journal, Springer, Springer, vol. 10(2), pages 129-147, August.
  10. Carlos F. Alves & F. Teixeira dos Santos, 2005. "The Informativeness of Quarterly Financial Reporting: The Portuguese Case," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 177, Universidade do Porto, Faculdade de Economia do Porto.
  11. Rui Henrique Alves, 2004. "Europe: Looking for a New Model," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 154, Universidade do Porto, Faculdade de Economia do Porto.
  12. Carlos Alves & Victor Mendes, 2004. "Self-Interest on Mutual Fund Management: Evidence from the Portuguese Market," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 162, Universidade do Porto, Faculdade de Economia do Porto.

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