Board of directors, performance and firm value in Brazilian listed state-owned enterprises

Abstract

This paper investigates the relationship between the board of directors' structure and firm performance and the value of Brazilian listed state-owned enterprises (SOEs), from 2002 to 2017, totaling 327 observations using an unbalanced panel data with fixed and random effects regressions. The evolution of corporate governance practices adopted by the boards is presented for this period, using a Board Structure Index (BSI). The results indicate a significant positive relation between the board's structure and firm performance, measured by ROE and ROA, and firm value, measured by Tobin's q . These findings are consistent with corporate governance literature, in the sense that the board's role of monitoring management reduces agency conflicts. The results also show an improvement in adopting corporate governance practice on Brazilian SOEs' boards over the last decade.