THE CHARACTERISTICS OF THE BOARD OF DIRECTORS
AND THE LIFE CYCLE OF FIRMS: AN EMPIRICAL STUDY OF THEIR RELATIONS
Name: FELIPE DE FREITAS GONÇALVES
Publication date: 26/04/2019
Advisor:
Name |
Role |
|---|---|
| JOSE ELIAS FERES DE ALMEIDA | Advisor * |
Examining board:
| Name |
Role |
|---|---|
| PATRÍCIA MARIA BORTOLON | Internal Examiner * |
| JOSE ELIAS FERES DE ALMEIDA | Advisor * |
Summary: This master thesis investigates how Corporate Governance structures adapt to the lifecycle stages of companies, in the international scenario. Being a central piece of the governance mechanism, the Board of Directors is responsible for solving conflicts of interest between the agents (managers) and principals (shareholders) as evidenced by Jensen and Meckling (1976), preventing the manager's personal interests from affecting the value of firm. Among the roles of the Board of Directors are monitoring management and advising executives, so, understanding their dynamics is key to understand the firm itself. Filatotchev et al. (2006) suggest that firms, in the course of their existence, adapt their governance structures according to the stage of their life-cycle. Considering this, the work seeks to understand these relationships, using the concepts of monitoring, independence and board size for the understanding of the Board of Directors. For the lifecycle, the dynamic approach proposed by Dickinson (2011) was utilized, WHERE life-cycle stages are a reflection of the results from operating, financing and investment cash flows. Panel, logit and probit regressions were done for a sample collected by the Thomson Reuters Eikon system of publicly traded companies from North America and the European Union between 1992 and 2018, with a total of 22,563 observations. The results showed that monitoring at the maturity stage is lower than at the other stages, even if independence is greater. In addition, the size of the board is larger in maturity than in growth and decline, and has a positive relation to the size of the firm itself.
