Board of directors: an analysis of their characteristics and impacts on Brazilian public companies
Name: TALLES VIANNA BRUGNI
Publication date: 04/09/2012
Advisor:
Name |
Role |
|---|---|
| PATRÍCIA MARIA BORTOLON | Advisor * |
Examining board:
| Name |
Role |
|---|---|
| JOSE ELIAS FERES DE ALMEIDA | Internal Examiner * |
| PATRÍCIA MARIA BORTOLON | Advisor * |
Summary: This study aimed to identify what are the key attributes that characterize the Boards of Directors (BoD) in Brazil, thus allowing for a better understanding of his influences on the capital market. I found that there is a high degree of correlation between the 31 analyzed characteristics, suggesting that others researches on the topic can be evidenced relationships of some variables that could be reflecting much of other strongly correlated characteristics. The main target was to better understand the environment in which the Board of Directors is inserted in order to define, in fact, what are the key attributes of these Boards under the optics of the variance of a larger set of characteristics. The factor analysis (FA) allowed a deeper analysis of the characteristics on this strand, expunging the specificcorrelation between them and then it built non-correlated factors. From that scenario, I built five indices to reflect the factors extracted from the FA, allowing them to be related to the value and performance of firms through multiple regressions; the factors are: both variable and fixed
compensation, the Board member's dedication, basic training and degree of BoD members (master and PhD degree). The results were divided into three sections: i) characterization of Boards of Directors in Brazil, to allow a better understanding of the BoD environment in the country; ii) determination of the key characteristics of the se Boards, in other words, which characteristics that explain most of data variance, through factor analysis and; iii) relationship between the built indices and the return, abnormal return, Tobin Q, ROA e ROE, in order to verify if the features that synthesize the environment of the BoD are perceived by investors as important at the time of the investment. I also found that directors' remuneration is responsible for explaining about 40% of the data variance referring to Boards of Directors, and this suggests that this characteristic is of great importance in the spectrum of corporate governance, especially regarding to the boards of Directors of the country. I have identified that the factor "fixed compensation" influences negatively and significantly both in return abnormal and Tobin Q. The relationship between the dependent variables and the other factors have also been tested and the results suggest that the dedication of the Board members is significant to explain the Tobin Q and that the level of education of the members explain significantly abnormal return, the return and the Tobin Q.
Keywords: Board of Directors, capital market, factor analysis, indices, value, performance.
