Ownership structure and board composition in a high ownership concentration context

Fraile, Isabel Acero; Fradejas, Nuria Alcalde

doi:10.1016/j.emj.2013.10.003

Cited by 42 publications

(15 citation statements)

References 39 publications

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“…Moreover, the board characteristics related to the independence of the directors do not reject the null hypothesis of the study, meaning that this result is in line with other studies, such as Berthelot et al (2012), Dal Vesco and Beuren (2016) and Acero Fraile and Alcalde Fradejas (2014). These studies found that the BD does not exert influence in the managerial decisions of firms in environments with high ownership concentration, and that corporate governance practices do not have an impact on business failure likelihood in their respective frameworks.…”

Section: Resultssupporting

confidence: 74%

“…Acero Fraile and Alcalde Fradejas (2014) found a potential minors’ expropriation risk in highly concentrated ownership contexts, suggesting the need to establish other instruments that ensure the protection of the minors’ interests, since the BD’s independence may be insufficient. As reported by Richardson et al (2015), the directors may not be so committed in pursuing the shareholders claims during periods of FD because the debtholders have priority over shareholders in residual claims, so they gain disproportionately more benefits from outside director’s work.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

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Board structure and financial distress in Brazilian firms

Cardoso

Peixoto

Barboza

2019

IJMF

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Purpose The purpose of this paper is to investigate what board characteristics affect companies in periods of financial distress (FD) among non-financial Brazilian firms and examine which model best fits to predict FD. Design/methodology/approach The sample comprises data from 2010 to 2016 of the non-financial Brazilian firms listed on the Brazilian Stock Exchange. To measure this relationship, a conditional logistic regression is performed. Findings A U-shaped relationship between the size of the board of directors (BD) and FD is found in all models, indicating an optimal number of six members in the BD during the period of FD. However, board characteristics (related to composition and directors’ independence) are insufficient to align the shareholders’ interests and unsuitable for avoiding or even reducing FD in firms when other factors are neglected. Furthermore, the results reveal what variables provide the best-fitting models to predict FD. Originality/value To the best of the authors’ knowledge, this is the first study that investigates how the composition of the BD affects the FD likelihood in the Brazilian context. The findings are potentially of interest to researchers and practitioners since this paper contributes to the growing literature on the influence of corporate governance mechanisms in periods of FD and the understanding of its prediction models.

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Section: Resultssupporting

confidence: 74%

Section: Theoretical Frameworkmentioning

confidence: 99%

Board structure and financial distress in Brazilian firms

Cardoso

Peixoto

Barboza

2019

IJMF

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“…In line with previous research, the largest firms are selected because of their representativeness (Goncharov et al, 2006;Albu and Girbina, 2015) and since they present greater agency costs and therefore corporate governance mechanisms are expected to be crucial (Karamanou and Vafeas, 2005). Particularly, agency conflicts are likely to be especially significant in Spanish firms, due to their special characteristics in relation to corporate governance, such as concentrated ownership and control, and a system based on a unitary board structure strongly dominated by the controlling shareholders (Acero and Alcalde, 2013;Manzaneque et al, 2016a). These characteristics make the Spanish context an interesting scenario to understand the role of corporate governance structures in the safeguard of the interests of all shareholders and stakeholders (La Porta et al, 1999;Manzaneque et al, 2016b).…”

Section: Sample and Datamentioning

confidence: 89%

Does compliance with corporate governance codes help to mitigate financial distress?

Urquiza

Ureba

2021

Research in International Business and Finance

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This paper analyzes whether the compliance with corporate governance codes helps to mitigate the financial distress of firms. We examine three different levels of compliance: overall compliance, the compliance with the recommendations regarding the board of directors and the compliance with the recommendations on board subcommittees. Our results reveal that only the fulfillment with the recommendations about the board of directors leads to a reduction in the likelihood of financial distress. These findings extend the academic debate concerning the role of governance codes and their impact on firm outcomes, and have practical implications for both professionals and firms. Moreover, our findings emphasize the need to distinguish between the different types of recommendations to investigate the effects of these codes. In addition, the results can be useful for policymakers in the configuration of new requirements and recommendations regarding corporate governance structures. Furthermore, our results contribute to the literature, delving into the determinants of the financial distress of firms.

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“…This study employs a panel data methodology to test the hypothesis. This methodology addresses potential unobserved firm-level heterogeneity, can handle variability in the data, permits more degrees of freedom, and produces more efficient and consistent results (Baltagi, 2005;Fraile & Fradejas, 2014;Gujarati & Porter, 2009). The panel data methodology has been adopted in previous corporate governance and financial reporting quality studies (S. N. Abdullah & Ismail, 2016;Razzaque et al, 2016).…”

Section: Research Model and Control Variablesmentioning

confidence: 99%