Research Question/Issue Do the motivations of cross-border minority acquisitions differ from those of domestic minority acquisitions? We examine and compare the underlying motivations for and consequences of domestic and cross-border minority acquisitions by analyzing data from transactions that took place across 31 countries over a 13-year period. Research Findings/Insights Using a sample of 11,926 domestic and cross-border minority acquisitions, we show that the interplay of financing and country-level governance motives is the main driver of such deals in both settings. We find that financially constrained firms are more likely to engage in both domestic and cross-border minority acquisitions, even in the face of higher information asymmetry and transaction costs that international transactions entail. In the wake of either domestic or cross-border deals, financially constrained firms' long-term debt increases; their short-term debt, cash holdings, and equity decrease. The greater likelihood of minority acquisitions of financially constrained firms is explained by the degree of corporate governance institutions in the country in which the targeted firm is based and by differences in levels of creditor and shareholder protections between the home countries of the targeted and acquiring firms involved. Our results remain robust after controlling for alternative explanations such as the contracting motive, the gravity model of foreign transactions, economic development levels, and differences in tax and exchange rates. Theoretical/Academic Implications Our results extend prior literature on mergers and acquisitions that have focused solely on control transfers or domestic deals. We provide empirical evidence for the importance of jointly considering financing and governance motivations in seeking to explain domestic and cross-border minority acquisitions and their consequences in alleviating financial constraints. We provide new evidence on how firm- and country-level characteristics interact to affect minority acquisitions. Practitioner/Policy Implications Our results offer valuable insights for business policy by highlighting how firms can circumvent financial constraints through partial integration, especially in cross-border settings. The results also offer evidence of beneficial ex post outcomes for targeted firms' leverage and liquidity. In terms of public policy, the results show that minority shareholder protections improve the equity market and provide a positive externality to the debt market through a certification effect.

We examine the role of country-level legal investor protection (i.e., shareholder and creditor protection) on firm investment-cash flow sensitivity (ICFS). Using underexplored research data on investor protection across 21 countries and working with a conservative empirical design, we extend prior literature on the relation between investor protection and ICFS and provide new evidence on how these country-level attributes interact to explain a firm's ICFS. We find that either the strong legal protection of minority shareholders or the strong legal protection of creditors reduces the sensitivity of investment to internal cash flow. However, in countries with strong levels of both minority shareholder and creditor protection, ICFS increases. Our results remain robust after controlling for several alternative explanations. The results support the argument that overregulation arises when policymakers increase investor protection at levels that lead firms to avoid external sources of finance, hampering firm investment. Our findings suggest that countries face a regulatory trade-off such that increasing investor protection (either shareholder or creditors protection) enhances financial markets efficiency, but excessive regulation can indeed lead to financial markets inefficiencies.

Prior research is not conclusive whether information asymmetries or managerial discretion are the cause of observed investment-cash flow sensitivity. This paper examines the effect of family firms' governance heterogeneity on firm's investment-cash flow sensitivity in Brazil. The Brazilian economic and corporate governance context present several idiosyncratic features, including weak minority shareholder protection, an underdeveloped capital market, macroeconomic uncertainties, the presence of controlling shareholders (especially families), and the excessive use of control-enhancing mechanisms, allowing us to explore in greater detail the drivers of investment-cash flow sensitivity. We find that investment is more sensitive to cash flow for firms with a highly entrenched family presence (divergence between corporate control and voting rights coupled with family management) than in less entrenched family firms. This result emerges primarily due to financial constraints from asymmetric information, rather than agency problems of free cash flow from abuse of managerial discretion. Our findings shed new light on the role of excessive control rights in investment decisions, allowing family managers to reallocate capital to cope with financial constraints in times of economic uncertainties.

We develop a new rationale for capital allocation in business groups' internal capital markets. We show that productivity and pledgeable income jointly drive capital allocation within an internal capital market. In financially constrained business groups, an efficient internal capital market can allocate marginal funds to firms that have high pledgeability of income because of a multiplier effect: a dollar of internal funds generates a bigger increase in investment. This result has important implications for the business group affiliation strategy. Whether or not a financially constrained but highly productive firm will benefit from group affiliation depends on its borrowing capacity vis-a-vis other affiliates.

In this paper, we investigate the role of agency conflicts between controlling and minority shareholders on the investment-risk relationship. Using panel data from 412 Brazilian firms between 1997 and 2010, we show that investment is less sensitive to idiosyncratic risk for companies in which the largest shareholder presents higher levels of ownership-control divergence. Dual-class shares are the main driver of the lower investment sensitivity to idiosyncratic risk. Board independence does not affect controlling shareholders' behavior toward risky investments. Our findings are consistent with entrenchment effects in the sense that dominant shareholders may select riskier projects when pursuing self-interest goals.

Este artigo apresenta as perspectivas da pesquisa em Governança de Empresas Familiares no Brasil, resultantes da chamada destaedição especial da RAC endereçada ao tema. Os dois artigos tratam de temas relevantes no debate acadêmico, a saber: a necessidade de um arcabouço teóricopara a avaliação de processos decisórios estratégicosde empresas familiares;e a importância da diversidade de gênero nos conselhos de administraçãodestas empresas. As proposições e evidências elencadas nos dois estudos, relativas aos construtos e variáveis que apresentaram consistência teórica ou estatística, abrem uma nova frente de pesquisa sobre o tema no Brasil, relacionada à conciliação da heterogeneidade da composição dos Conselhos de Administração com a criação de valor em Empresas Familiares.

Los esfuerzos para construir una teoría universal de los sistemas de negocios del mundo requieren una base empírica en la comprensión de la variedad que se necesita explicar. Para respaldar dicha teorización, analizamos las estructuras institucionales de 61 economías principales, que representan el 93,5% del PIB mundial de 2013 en paridad de poder adquisitivo. Encontramos nueve tipos principales de sistemas de negocios: altamente coordinados, mercados coordinados, mercados liberales, periféricos europeos, ciudades emergentes avanzadas, ciudades avanzadas, economías árabes basadas en el petróleo, emergentes y socialistas. Nuestros hallazgos ilustran la necesidad de ir más allá de los marcos de Variedades de capitalismo y sistemas de negocios; proporcionar apoyo empírico para la dicotomía CME versus LME para parte de la OCDE; identificar algunos de los sistemas de negocios propuestos recientemente como subtipos de grupos más grandes; indicar que la diversidad institucional puede aumentar con el nivel de desarrollo; y arrojó dudas sobre las nociones de capitalismo dirigido por el estado y por la familia como tipos de sistemas empresariales. Nuestra discusión sugiere, además, numerosas vías para el desarrollo de la teoría y la investigación empírica.

Si bien la investigación sobre el gobierno corporativo es el beneficiario de los avances en metodologías de investigación y técnicas estadísticas, se ha prestado menos atención a la medición de variables. Este documento cuestiona la conceptualización y la medición de la dualidad del CEO al resaltar su inestabilidad en gran parte no reconocida y los desafíos que impone la inestabilidad en la medición de variables dicotómicas. La dualidad del CEO se utiliza ampliamente en la investigación del gobierno corporativo y con frecuencia se realiza de manera dicotómica como una variable ficticia. Presentamos ejemplos de los frecuentes cambios en la dualidad dentro de las organizaciones que desafían nuestra visión actual de la dualidad del CEO. Encontramos que la inestabilidad de la dualidad del CEO en la práctica varía considerablemente tanto a nivel nacional como a nivel de empresa. Encontramos que existe una discrepancia entre la conceptualización actual de la dualidad del CEO, los patrones reales de datos y las medidas utilizadas por los investigadores de gobernabilidad. El documento llama la atención sobre los límites de conceptualizar y medir lo que son datos aparentemente dicotómicos, los revisa en la investigación y en la práctica, y proporciona ejemplos, recomendaciones y evaluaciones de formas alternativas en que se pueden utilizar los datos existentes.

El propósito de este estudio es analizar la contribución del artículo de Martin y Gomez-Mejia y proponer enfoques complementarios y formas de probar sus hipótesis. Este estudio compara diferentes enfoques teóricos que complementan la riqueza socioemocional para explicar las decisiones del gerente y el desempeño de la empresa. Los autores de este estudio argumentan que el progreso podría lograrse mediante la combinación de las proposiciones de Martin y Gomez-Mejia con elementos de las teorías organizacionales existentes que se basan en la economía, como la visión basada en recursos, el costo transaccional y los derechos de propiedad. Este estudio proporciona una nueva perspectiva del trabajo de Martin y Gomez-Mejia publicado en este número.

Nos basamos en la perspectiva de la riqueza socioemocional para examinar la influencia de la propiedad familiar en el incumplimiento de las empresas con los códigos de gobierno corporativo. Nuestros resultados producen un efecto en forma de U invertida de la propiedad familiar en el incumplimiento. Mientras que la influencia de la familia y la dimensión de control conducen a altos niveles de incumplimiento, la sociabilidad que se deriva de la dimensión de la imagen y la reputación disminuye el incumplimiento. En presencia de un posible conflicto de agencia, la dimensión de control prevalece sobre la reputación, incluso en países con instituciones de gobernabilidad sólidas. Nuestros hallazgos tienen implicaciones críticas para la teoría de la empresa familiar, para la formulación de políticas de gobierno y también para comprender mejor el gobierno corporativo en las empresas familiares.

This chapter explains how regulation affects corporate governance. The discussion uses a comparative perspective and includes a broad view of corporate governance. It first examines the classic tension in regulation theory between the interests of regulators and policymakers in influencing governance, and then discusses several key limitations of this kind of approach. The next section explores two primary perspectives for studying regulation in corporate governance¿law and economics and politics¿before the chapter concludes with a section on the various impacts regulation has had on corporate governance practices. Hard and soft law are also studied.

The turning of the twenty-first century has been marked by reforms in corporate governance practices around the world. Prevalent ways of doing business are changing with increasing demands for corporate transparency and accountability, shifts in ownership control, empowerment of new types of owner, and so on. Countries and firms have adapted their corporate governance policies and practices accordingly. This chapter explores the current patterns of the ownership structure of publicly listed firms in six emerging countries: Brazil, Chile, South Korea, Czech Republic, Hungary, and Poland in the beginning of the twenty-first century, and compare our data with existing research from the 1990s. The chapter concludes that, although concentration of corporate shareholdings continues to be a common denominator among these emerging countries, the processes and structures controlling firms are remarkably different.