PUBLICACIONES

Minority Stockholders' Protection in a New Corporate Control Law: Market Implications in an Emerging Economy

ISI: Minority Stockholders' Protection in a New Corporate Control Law: Market Implications in an Emerging Economy

FRANCO PARISI F., IKE MATHUR., LANCE NAIL.

2009 - Emerging Markets Finance and Trade - Vol. 45, Nº 6, Pp 4 - 19

Abstract

This paper analyzes the effect of a new corporate governance law in the emerging capital market of Chile to determine if capital markets perceived the intended protection of minority stockholders against wealth expropriation as effective. The unique nature of the new law allowed for voluntary adoption during the initial three-year period, after which it became mandatory. We find no evidence of superior abnormal returns for those firms voluntarily adopting the new law versus those forced to accept the new law as it became mandatory. Trading volume also increased for those not adopting and declined for those that did voluntarily adopt. These results indicate that the capital markets did not perceive voluntary adoption of the new law as effective protection for minority shareholders. We also find a greater presence of institutional investors in the ownership structure of those firms not voluntarily adopting the new law, indicating their monitoring role by investing in firms with better corporate governance practices. Our results suggest that, in the Chilean case, the presence of strong institutional investors is as effective a corporate governance mechanism as is the new law.

Keywords

¿Quieres seguir leyendo? [Accede a la publicación completa]

Profesor Pedro Leiva expuso en el Seminario SUSESO-ISTAS 21

El pasado 19 de abril, el Director del Observatorio de Gestión de Personas de la Facultad de Economía y Negocios de la Universidad de Chile, Profesor Pedro Leiva participó como...

Profesora Soledad Etchebarne participo en Seminario de Educación Financiera en Jóvenes Chilenos: Evidencia y Desafíos.

El pasado 14 de marzo de 2018, se llevo a cabo en el auditorio del Banco Central el Seminario de “Educación Financiera en Jóvenes Chilenos: Evidencia y Desafíos”. E...

Todos los Derechos © 2014 | Departamento de Administración - Facultad de Economía y Negocios - Universidad de Chile - Diagonal Paraguay 257, torre 26, oficina 1101, piso 11, Santiago, Chile.