Governance structure and the value of brazilian listed firms

Abstract

Corporate governance seeks to increase the probability that suppliers of financial resources will assure themselves the return on their investment through a set of mechanisms including the Board of Directors. This paper investigates if the governance structure was important to the value of Brazilian listed firms from 1998 to 2000. Three governance variables were considered: the separation of chief executive officer and chairman positions (DE), board size (TOT), and board independence (Indep). The multiple regression method with cross sectional data was applied. The variable chief executive officer as chairman (DE) showed the most important results, with evidence that, on average, firms with different people in charge of the chief executive officer and chairman positions have higher market value.