Governance, Risk, Performance and Value of Brazilian Public Traded Companies

21 Pages Posted: 8 May 2012

See all articles by Valdir Lameira

Valdir Lameira

INESC Coimbra

Walter Ness

affiliation not provided to SSRN

Date Written: February 1, 2010

Abstract

This study estimated the quality of governance practiced by a significant sample of Brazilian publicly traded companies between 2002 and 2006, and related it to risk, performance and value. An index composed of twenty questions, with all answers in binary form, was constructed to measure the quality of governance. We used the Hausman test and find endogeneity between governance and value. Afterwards we applied the structural equations method and constructed several models involving the relationships among governance; performance measured by roe (return on assets) and ets (ebit-to-sales); risk measured by the wacc (weighted average cost of capital), and value measured by mts (market-to-book sales) and mtbv (market-to-book value). We observed the existence of statistically significant results between higher levels of governance, lower risk, better performance and higher value.

Keywords: Governance, risk, performance, endogeneity, and structural equations

JEL Classification: G30, C30, C33

Suggested Citation

Lameira, Valdir and Ness, Walter, Governance, Risk, Performance and Value of Brazilian Public Traded Companies (February 1, 2010). Available at SSRN: https://ssrn.com/abstract=2054661 or http://dx.doi.org/10.2139/ssrn.2054661

Valdir Lameira (Contact Author)

INESC Coimbra ( email )

Rua Antero de Quental, 199, Coimbra
Coimbra, Coimbra 3000-033
Portugal

Walter Ness

affiliation not provided to SSRN ( email )

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