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Capital markets and corporate governance in Colombia

Author

Listed:
  • Gutiérrez, Luis

    (Economics, Universidad del Rosario)

  • Pombo, Carlos

    (School of Management, Universidad de Los Andes)

Abstract

This paper analyses the long term trends in Colombia's capital market development and corporate governance implementation by large public corporations. In that sense, it discusses the historical pattern of corporate governance in the country both regarding legal regime and companies' practices: Corporate governance practices commonly adopted by security issuers including features related to transparency. The paper also analyzes the recent corporate governance reforms, the performance of capital market, and identifies the major drivers and constraints to firm's equity capital financing and capital market deepening. Among them it can be highlighted the role of the IPOs associated with the privatized state owned companies during the nineties and the effects of the mergers and acquisitions that has taken within the main business groups that have reinforced firm delisting and migration patterns. Regarding the financial sector the paper analyzes the effect of the 1993 financial reform on the banking ownership structure, the public debt and fixed income market, and the role of pension funds. The paper ´s main conclusion is the need of equity market deepening to sustain the steady growth of the pension funds capitalization system in the country

Suggested Citation

  • Gutiérrez, Luis & Pombo, Carlos, 2008. "Capital markets and corporate governance in Colombia," Galeras. Working Papers Series 025, Universidad de Los Andes. Facultad de Administración. School of Management.
    • Handle: RePEc:uac:somwps:025
    as

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    File URL: https://repositorio.uniandes.edu.co/bitstream/handle/1992/46373/Galeras-de-administraci%C3%B3n-25.pdf
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    References listed on IDEAS

    as
    1. Carlos Pombo & Manuel Ramirez, 2002. "Privatization in Colombia: a plant performance analysis," Borradores de Investigación 3377, Universidad del Rosario.
    2. Sergio Clavijo, 2000. "Hacia La Multibanca En Colombia:Retos Y "Retazos Financieros"," Borradores de Economia 2780, Banco de la Republica.
    3. Alberto Chong & Florencio Lopez-de-Silanes, 2007. "Corporate Governance in Latin America," Research Department Publications 4494, Inter-American Development Bank, Research Department.
    4. Pombo, Carlos & Gutiérrez, Luis H., 2007. "Corporate Governance and Firm Valuation in Colombia," IDB Publications (Working Papers) 1608, Inter-American Development Bank.
    5. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 2006. "What Works in Securities Laws?," Journal of Finance, American Finance Association, vol. 61(1), pages 1-32, February.
    6. Gutiérrez, Luis H. & Pombo, Carlos, 2009. "Corporate ownership and control contestability in emerging markets: The case of Colombia," Journal of Economics and Business, Elsevier, vol. 61(2), pages 112-139.
    7. Carlos Pombo, 2002. "Industrialization and industrial policy in Colombia: a tale of economic development," Borradores de Investigación 2842, Universidad del Rosario.
    8. Carlos Pombo & Luis H. Gutiérrez, 2007. "Corporate Governance and Firm Valuation in Colombia," Research Department Publications 4470, Inter-American Development Bank, Research Department.
    9. Arango, Miguel, 2006. "Evolución y crisis del sistema financiero colombiano," Estudios y Perspectivas – Oficina de la CEPAL en Bogotá 4809, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Sergio Clavijo, 2000. "Hacia la Multibanca en Colombia: Retos y 'Retazos' Financieros," Borradores de Economia 150, Banco de la Republica de Colombia.
    11. Alberto Chong & Florencio Lopez-de-Silanes, 2007. "Corporate Governance in Latin America," Research Department Publications 4494, Inter-American Development Bank, Research Department.
    12. Miguel Arango, 2006. "Evolución y crisis del sistema financiero Colombiano," Documentos de Investigación 2676, Cepal Naciones Unidas.
    13. Camila Aguilar & Mauricio Cárdenas Santa María & Marcela Meléndez A. & Natalia Salazar F., 2007. "The development of Colombian bond market," Working Papers Series. Documentos de Trabajo 9195, Fedesarrollo.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. González, Maximiliano & Guzmán, Alexander & Pombo, Carlos & Trujillo, María Andréa, 2012. "Family involvement and dividend policy in listed and non-listed firms," Galeras. Working Papers Series 034, Universidad de Los Andes. Facultad de Administración. School of Management.
    2. Pombo, Carlos & Gutiérrez, Luis H., 2011. "Outside directors, board interlocks and firm performance: Empirical evidence from Colombian business groups," Journal of Economics and Business, Elsevier, vol. 63(4), pages 251-277, July.
    3. González, Maximiliano & Garay, Urbi, 2012. "Market Segmentation: Venezuelan ADRs," Galeras. Working Papers Series 035, Universidad de Los Andes. Facultad de Administración. School of Management.
    4. González, Maximiliano & Guzmán, Alexander & Pombo, Carlos & Trujillo, María Andréa, 2013. "Corporate governance mechanisms in family firms: Evidence from CEO turnovers," Galeras. Working Papers Series 037, Universidad de Los Andes. Facultad de Administración. School of Management.
    5. González, Maximiliano & Garay, Urbi & Rosso, John, 2014. "The cost of equity in emerging markets: The case of Latin America," Galeras. Working Papers Series 038, Universidad de Los Andes. Facultad de Administración. School of Management.
    6. Pablo, Eduardo & González, Maximiliano & Garay, Urbi, 2013. "Cultural distance and its effect on cross-border entry mode: Latin American evidence," Galeras. Working Papers Series 036, Universidad de Los Andes. Facultad de Administración. School of Management.

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    More about this item

    Keywords

    Board independence; corporate governance; firm value; Colombian corporations;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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