The Relation between corporate governance and market value: mitigating endogeneity Problems | Zendy

Daniel Ferreira Caixe | Zendy; Elizabeth Krauter | Zendy

AI Assistant Blog Pricing

Home ZAIA Blog

Open Access

The Relation between corporate governance and market value: mitigating endogeneity Problems

Author(s) -

Daniel Ferreira Caixe,

Elizabeth Krauter

Publication year - 2014

Publication title -

brazilian business review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.176

H-Index - 4

ISSN - 1808-2386

DOI - 10.15728/bbr.2014.11.1.5

Subject(s) - endogeneity , corporate governance , simultaneity , generalized method of moments , business , market value , value (mathematics) , enterprise value , panel data , accounting , monetary economics , econometrics , economics , financial economics , finance , physics , classical mechanics , machine learning , computer science

This paper investigates whether the adoption of good corporate governance practices influences the market value of Brazilian firms. For this purpose, we used an unbalanced panel over the period from 2002 to 2010, composed of 233 listed nonfinancial companies, for a total of 1,110 observations. Because of endogeneity problems such as omitted variables, simultaneity and the feedback effect, we employed dynamic multiple linear regression models, estimated by the system generalized method of moments (System GMM). The results indicate that firms listed in one of the three premium corporate governance segments of the BM&FBovespa (Level 1, Level 2 and Novo Mercado) are priced higher by the market compared to firms listed in the traditional trading segment. Therefore, corporate governance has a positive effect on the market value of Brazilian firms.

The content you want is available to Zendy users.

Already have an account? Click here to sign in.

Having issues? You can contact us here

Accelerating Research