Abstract

BENAVIDES FRANCO, JULIÁN  and  MONGRUT MONTALVAN, SAMUEL. GOVERNANCE CODES: FACTS OR FICTIONS? A STUDY OF GOVERNANCE CODES IN COLOMBIA. estud.gerenc. [online]. 2010, vol.26, n.117, pp.85-102. ISSN 0123-5923.

This article studies the effects on accounting performance and financing decisions of Colombian firms after issuing a corporate governance code. We assemble a database of Colombian issuers and test the hypotheses of improved performance and higher leverage after issuing a code. The results show that the firms’ return on assets after the code introduction improves in excess of 1%; the effect is amplified by the code quality. Additionally, the firms leverage increased, in excess of 5%, when the code quality was factored into the analysis. These results suggest that controlling parties commitment to self restrain, by reducing their private benefits and/or the expropriation of non controlling parties, through the code introduction, is indeed an effective measure and that the financial markets agree, increasing the supply of funds to the firms.

Keywords : Corporate governance; governance codes; agency theory; accounting performance; leverage.

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