Going Public without Governance: Managerial Reputation Effects

摘要: This paper addresses the agency problem between controlling shareholders and minority shareholders. is common among public firms in many countries where legal system does not effectively protect against oppression by We show that even without any explicit corporate governance mechanisms protecting shareholders, can implicitly commit to expropriate them. Stock prices of such companies are significantly higher more likely go because this reputation effect. Moreover, insiders divest shares gradually over time, at a rate negatively related degree moral hazard. RECENT EMPIRICAL RESEARCH INDICATES THAT relevant finance issue traditional management but rather may arise some for two reasons: ~1! structure insulates large shareholders—that is, those with majority votes often an involvement firm’s management—from takeover threats or monitoring; 1 ~2! either poor laws enforcement laws. 2 Despite lack protection average ratio stock market capitalization held minorities gross national product greater than 40 percent sample 49 countries. 3 raises question why people willing be when they know