Corporate Governance and Ownership: Measurement and Impact on Corporate Performance and Dividend Policies in Argentina
Ricardo Bebczuk ()
Authors registered in the RePEc Author Service: Santiago Dodero
No 3212, Research Department Publications from Inter-American Development Bank, Research Department
The goal of this paper is twofold. First, we assemble, for the first time, quantitative measures of the quality of the corporate governance and the ownership structure of 65 non-financial listed companies in Argentina with information for 2003-2004. A wide array of official and private sources was used for this purpose. In a nutshell, companies seem to be poorly governed vis-à-vis international practices. In turn, ownership appears to be quite concentrated at the level of the largest ultimate shareholder, but separation of control and cash flow rights prevails in less than half of the companies, with pyramiding being the main mechanism for creating such a wedge. Second, we test the predictions of recent theories linking those measures with corporate performance and dividend policy in 2000-2003. In regard to performance, the results point to a sizable and robust effect of our governance measure on both the return on assets and Tobin` q. Moreover, the separation of control and cash flow rights for the largest shareholder -an indicator of incentives to expropriate minority shareholders -hinders performance directly, and also attenuates the beneficial impact of good governance rules. When it comes to dividends, only our governance measure appears to exert a positive and marked effect on the cash dividend-to-cash flow ratio. However, the estimates prove to be fragile to the inclusion of some additional controls correlated to governance.
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Working Paper: Corporate Governance and Ownership: Measurement and Impact on Corporate Performance and Dividend Policies in Argentina (2005)
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