State-controlled companies and political risk: Evidence from the 2014 Brazilian election

Carvalho, Augusto; Guimarães, Bernardo

doi:10.1016/j.jpubeco.2018.02.002

Cited by 11 publications

(3 citation statements)

References 72 publications

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“…Thus, the method cannot be used with privately held or wholly state-owned firms, where there are no stock market data. However, ESM can be used for listed but partially state-owned (i.e., hybrid or mixed) enterprises (see, e.g., Carvalho & Guimaraes, 2018 ). 3…”

Section: The Event Study Methodsmentioning

confidence: 99%

The event study in international business research: Opportunities, challenges, and practical solutions

et al. 2022

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The event study or event study method (ESM) is an empirical technique for capturing investors’ reaction to an event affecting one or more publicly traded firms. The ESM has been little employed in international business (IB) research despite its frequency in accounting, economics, and finance; for example, only two percent of the empirical articles in JIBS over 1970–2019 include an event study. While this scarcity could indicate a lack of demand, we argue that the field of IB studies offers many interesting and important research opportunities for an event study. We believe that the challenges arise primarily from the supply side, because conducting an event study involves overcoming a variety of data and analytical hurdles. We examine these methodological challenges and offer practical solutions designed to encourage adoption of the ESM. An online appendix with coding and examples provides additional resources. Supplementary Information The online version contains supplementary material available at 10.1057/s41267-022-00509-7.

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Section: The Event Study Methodsmentioning

confidence: 99%

The event study in international business research: Opportunities, challenges, and practical solutions

et al. 2022

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“…Many previous studies of shareholder reaction to information disclosures have examined the role of agency costs using a capital markets methodology. (for example, see (Barth, Li, & McClure, 2021;Beaver, McNichols, & Wang, 2020;Binz & Graham, 2022;Carvalho & Guimaraes, 2018;Eden, Miller, Khan, Weiner, & Li, 2022;Warfield, Wild, & Wild, 1995)).…”

Section: Methodsmentioning

confidence: 99%

Managerial Incentives and the Valuation of International Joint Venture Formation

Wild

2022

102

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Strategic management decisions and actions involving international joint venture formations are significant to many firms and have major economic consequences. Previous empirical evidence on the effects of joint venture formation announcements on shareholder wealth reveals that firm value is more often positively impacted. However, many previous analyses of shareholder wealth from joint venture formations do not fully explore cross-sectional differences in managerial incentives to pursue these international investments. The primary purpose of this study is to exploit these cross-sectional differences using agency theory to explain managerial behavior and subsequent shareholder effects. This study capitalizes on agency theory’s notion that managers are not necessarily motivated solely by the maximization of firm value, but instead are interested in maximizing their own utility. The study’s findings are consistent with agency theoretic hypotheses based on a broad cross-section of international joint ventures. Results demonstrate that shareholder returns to international joint venture formation exhibit considerable variability and, importantly, are at least partially explained by cross-sectional differences in agency incentives. Specifically, returns to shareholders are positively related to the level of managerial ownership and inversely related to the level of free cash flow. Moreover, a positive relation is found between shareholder returns and the joint interaction between leverage and free cash flow. These findings indicate that the effect of international joint venture formation on shareholder value is not uniform and, more importantly is at least partly influenced by managers’ agency incentives.

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“…This applies to 19% of the sample. 6 For additional background on political risk, see Carvalho and Guimaraes (2018).…”

Section: E N D N O T E Smentioning

confidence: 99%

International joint ventures, shareholder returns, venture complexity, and political risk

Wild

2022

J Corp Accounting Finance

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This study investigates the formation of international joint ventures into emerging markets and the corresponding implications to shareholder wealth. Empirical evidence from this study reveals that formation of international joint ventures into emerging markets are value enhancing for shareholders. The formation of international joint ventures increases firm value by more than 1%, on average. This study also investigates two important factors for their influence on the market's assessment of the joint venture formation-the complexity of the joint venture and the political risk of the host country. Evidence in this study reveals that less complex ventures into emerging markets reap significantly greater shareholder wealth effects relative to more complex ventures. Evidence also reveals that shareholders receive a risk premium for accepting greater political risk. In addition to understanding the ramifications of international joint venture formation, this study has relevance for managers' site selection decisions when considering venture complexity and the political risk of emerging markets.

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State-controlled companies and political risk: Evidence from the 2014 Brazilian election

Cited by 11 publications

References 72 publications

The event study in international business research: Opportunities, challenges, and practical solutions

The event study in international business research: Opportunities, challenges, and practical solutions

Managerial Incentives and the Valuation of International Joint Venture Formation

International joint ventures, shareholder returns, venture complexity, and political risk

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