Different Levels of Corporate Governance and the Ohlson Valuation Framework: The Case of Brazil

Corporate Ownership & Control, Volume 9, Issue 2, 2012

12 Pages Posted: 27 Jan 2013

See all articles by Talles Vianna Brugni

Talles Vianna Brugni

University of São Paulo (USP); Pontifical Catholic University of Rio de Janeiro (PUC-Rio)

Alfredo Sarlo Neto

Federal University of Espírito Santo

Patricia Maria Bortolon

Federal University of Espírito Santo

Antônio Góes

Technical University of Lisbon (UTL)

Date Written: June 4, 2012

Abstract

We examine whether Brazilian companies with enhanced corporate governance levels have higher market values according to the model of Ohlson (1995), modified to include variables such as governance level, type of control and shareholding structure. This study produces empirical results based on information taken from the Economática® and Brazilian Securities Commission (CVM) databases, in the period from 2004 to 2010. Multiple linear regression on panel data is used to analyze a sample of 90 firms through 630 observations. The findings indicate that the addition of governance measures to the model increased its explanatory power, suggesting that nonfinancial information about governance practices and ownership structure also can explain the market value of stocks. The results also indicate that firms with shares traded on the Level 2 and New Market trading segments of the BM&FBovespa, which require enhanced governance practices, are important signals of good governance and consequently increase firms’ market value. The type of control was also positively related to the market value, suggesting that firms under family control and government control are more valuable than companies without concentrated control.

Keywords: Corporate Governance, Value, Ohlson, Family Control

JEL Classification: C52, M41, G34

Suggested Citation

Brugni, Talles Vianna and Brugni, Talles Vianna and Sarlo Neto, Alfredo and Bortolon, Patricia Maria and Góes, Antônio, Different Levels of Corporate Governance and the Ohlson Valuation Framework: The Case of Brazil (June 4, 2012). Corporate Ownership & Control, Volume 9, Issue 2, 2012, Available at SSRN: https://ssrn.com/abstract=2207112

Talles Vianna Brugni (Contact Author)

University of São Paulo (USP) ( email )

Rua Luciano Gualberto, 315
São Paulo, São Paulo 14800-901
Brazil

Pontifical Catholic University of Rio de Janeiro (PUC-Rio) ( email )

Rio de Janeiro
Brazil

HOME PAGE: http://https://iag.puc-rio.br/pt/

Alfredo Sarlo Neto

Federal University of Espírito Santo ( email )

Av. Fernando Ferrari
No. 514, Goiabeiras
Vitória
Brazil

Patricia Maria Bortolon

Federal University of Espírito Santo ( email )

Av. Fernando Ferrari
No. 514, Goiabeiras
Vitória
Brazil

Antônio Góes

Technical University of Lisbon (UTL) ( email )

R. Miguel Lupi, 20
Lisbon, 1200
Portugal

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