Two essays on corporate governance
Description
This dissertation includes two essays which examine different corporate governance mechanism in two different countries. In the first essay, I analyze the corporate governance mechanisms in Chile and their implications for ownership concentration. I review the corporate governance legal and regulatory framework and the existing monitoring mechanisms available to minority shareholders in Chile. The analysis suggests that although the corporate governance regulatory framework in Chile is comprehensive and well drafted, the enforcement of such laws is deficient; moreover, the market for corporate control has been nonexistent, resulting in a low protection of minority shareholder rights and consequently in high ownership concentration of Chilean firms. In addition, I empirically examine the relation between corporate performance and equity ownership for 80 Chilean firms in 2001. I find a positive and significant relationship between corporate performance and management ownership. I also find weak evidence to support the view that institutional investors play an active role in monitoring corporate management In the second essay, I look at the shareholder-initiated proposals process in the U.S. More specifically, I assess the effect of environmental shareholder proposals on firm behavior and examine all negotiated environmental proposals from the 1990 to 1997 proxy seasons. I find that socially responsible institutional investors were successful in negotiating 63 percent of all environmental management proposals presented in that period. I verify that at least 60 percent of targeted companies implemented the negotiated proposals, and many others have taken steps to comply with these agreements. The evidence further suggests that environmental shareholder advocacy brings about increases in firms' operating income and return on assets (ROA), therefore improving firm performance. I find no statistically significant changes in long-term stock returns