Private or public? a taxonomy of optimal ownership and management regimes

We develop a theory of public versus private ownership based on value diversion by managers. Government is assumed to face stronger institutional constraints than has been assumed in previous literature. The model which emerges from these assumptions is fexible and has wide application. We provide amapping between the qualitative characteristics of an asset, its main use - including public goods characteristics, and spillovers toother assets values - and the optimal ownership and management regime. The model is applied to single and multiple related assets. We address questions such as; when is it optimal to have one of a pair ofr elated assets public and the other private; when is joint management desirable; and when should a public asset be managed by the owner of a related private asset? We show that while private ownership can be judged optimal in some cases solely on the basis of qualitative information, the optimality of any other ownership and management regimes relies on quantitative analysis. Our results reveal the situations in which policy makers will have difficulty in determining the opimal regime.

Board of directors and top management team: a study on CEO relative power and financial return

Best corporate governance practices published in the primers of Brazilian Securities and Exchange Commission and the Brazilian Corporate Governance Institute promote board independence as much as possible, as a way to increase the effectiveness of governance mechanism (Sanzovo, 2010). Therefore, this paper aims at understanding if what the managerial literature portraits as being self-evident - stricter governance, better performance - can be observed in actual evidence. The question answered is: do companies with a stricter control and monitoring system perform better than others? The method applied in this paper consists on comparing 116 companies in respect to the their independence level between top management team and board directors– being that measured by four parameters, namely, the percentage of independent outsiders in the board, the separation of CEO and chairman, the adoption of contingent compensation and the percentage of institutional investors in the ownership structure – and their financial return measured in terms return on assets (ROA) from the latest Quarterly Earnings release of 2012. From the 534 companies listed in the Stock Exchange of Sao Paulo – Bovespa – 116 were selected due to their level of corporate governance. The title “Novo Mercado” refers to the superior level of governance level within companies listed in Bovespa, as they have to follow specific criteria to assure shareholders ´protection (BM&F, 2011). Regression analyses were conducted in order to reveal the correlation level between two selected variables. The results from the regression analysis were the following: the correlation between each parameter and ROA was 10.26%; the second regression analysis conducted measured the correlation between the independence level of top management team vis-à-vis board directors – namely, CEO relative power - and ROA, leading to a multiple R of 5.45%. Understanding that the scale is a simplification of the reality, the second part of the analysis transforms all the four parameters into dummy variables, excluding what could be called as an arbitrary scale. The ultimate result from this paper led to a multiple R of 28.44%, which implies that the combination of the variables are still not enough to translate the complex reality of organizations. Nonetheless, an important finding can be taken from this paper: two variables (percentage of outside directors and percentage of institutional investor ownership) are significant in the regression, with p-value lower than 10% and with negative coefficients. In other words, counter affirming what the literature very often portraits as being self-evident – stricter governance leads to higher performance – this paper has provided evidences to believe that the increase in the formal governance structure trough outside directors in the board and ownership by institutional investor might actually lead to worse performance. The section limitations and suggestions for future researches presents some reasons explaining why, although supported by strong theoretical background, this paper faced some challenging methodological assumptions, precluding categorical statements about the level of governance – measured by four selected parameters – and the financial return in terms of financial on assets.

Pompidou & Pompeia: a parallel between the management strategies of two cultural institutions in the French and Brazilian contexts

A presente pesquisa foi conduzida na forma de um estudo de caso de duas instituições culturais no contexto francês e brasileiro. O Centro Pompidou é um projeto presidencial de museu financiado pelo Estado, com a missão de tornar a arte moderna em todas as suas expressões acessíveis ao público em geral. O Sesc Pompeia é um centro multidisciplinar de cultura e esporte - financiado pelo dinheiro dos impostos e administrado pela Federação do Comércio . O Sesc Pompéia é dedicado à oferta de educação informal através do cultivo da mente e do corpo. O estudo examina se as teorias de dependência de recursos e de poder podem ser utilizadas para conceituar a relação que o Centro Pompidou e do Sesc Pompéia tem com seus stakeholders financeiros. Mais especificamente, será discutido em que medida o grau de dependência influencia a estratégia de gestão das instituições. O objetivo é de responder a pergunta seguinte: quais são as estratégias que as instituições adotam para reduzir sua dependência com relação a seus principais stakeholders financeiros? Finalmente algumas implicações práticas de gestão serão elaboradas a partir do paralelo entre as estratégias das duas instituições.

Corporate governance development in privately held family businesses: a multiple case analysis

The objective of this study is to better understand and illustrate the process and the motivations for corporate governance implementation in Brazilian privately held family businesses. Three case companies were analyzed through an adapted developmental framework to illustrate the progression in corporate governance in response to changes in the ownership, investment and management dimensions over time. In this development, causal relationships between corporate governance and the three other framework dimensions were identified. It was found that the analyzed companies´ corporate governance implementation was motivated by the need to curb agency costs, whereas a cornerstone in this development was the first generational change. Only after the family businesses have reached the necessary maturity on all three dimensions, corporate governance practices were implemented. Put simply, the analyzed case companies developed formal systems as they grew more complex. This study complements the academic discussions on corporate governance in family businesses by offering Brazilian evidence on its underlying motivations and sequential implementation over time.