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Publicación Acceso abierto Ownership Concentration and the Determinants of Capital Structure in Latin America(Universidad de los Andes, 2008) Céspedes, Jacelly; González Ferrero, Maximiliano; Molina Manzano, Carlos AlbertoIn this paper we study the capital structure determinants of Latin American firms using a comprehensive sample from 1996 to 2005 covering seven countries. We argue that ownership control is important for capital structure decisions in Latin America, where firms present a higher ownership concentration. We find a U-shape relation between ownership concentration and leverage. When ownership concentration is low its effect on leverage is negative, and when ownership concentration is high its effect on leverage is positive. This U-shape relation is consistent with the argument that ownership-concentrated firms avoid equity issuing because they do not want to share or to lose control, and this effect is contrary if the ownership structure has enough dispersion and losing control is not an issue. Consistent with the control argument, we also find that firms with more growth opportunities exhibit higher leverage. In addition, and consistent with previous literature on developed countries, we find that other factors that do not proxy for ownership control are important determinants of leverage. Firms that are larger, with more tangible assets, and that are less profitable are also more leveraged.Publicación Acceso abierto The Role of Debt in the Family Business Succession Problem(Universidad de los Andes, 2008) González Ferrero, Maximiliano; Misle, Bernardo; Prado, JorgeThis paper studies the typical succession problem in family businesses with respect to the hiring or not a professional manager once the founder decides to retire. Burkart et al. (2003) show how a legal framework is an important determinant in solving this problem. We extend their model in order to consider the possibility that the founder uses bank debt to alleviate monitoring cost. We find that bank debt plays also an important role in family businesses succession problem and gives an alternative explanation of why family firms in emerging market countries are mostly financed through the banking system and do not float their own shares in the capital markets.Publicación Acceso abierto Corporate Governance Mechanisms in Family Firms: Evidence from CEO Turnovers(Universidad de los Andes, 2013) González Ferrero, Maximiliano; Guzmán Vásquez, Álvaro Alexander; Pombo Vejarano, Carlos; Trujillo Dávila, María AndreaResearch Question/Issue: How sensitive is CEO turnover to firm performance in the context of family firms? Research Findings/Insights: Using a detailed database of mostly non-listed Colombian firms, we found that family ownership (direct and indirect through pyramidal structures) reduces the probability of CEO turnover when financial performance has been poor; however, we found that the opposite effect is true when families participate actively on the board of directors. These results hold true even when the manager is a family member, even though the probability of turnover is lower for a family member. This lower probability does not affect the firm's financial performance. In other words, a benevolent entrenchment of the family CEO seems to occur. Theoretical/Academic Implications: First, the theoretical premise that bad financial performance usually leads to changes in top management has been widely tested around the world; however, this study is among the few to deal with this issue in terms of closely held firm micro-data. Second, our results contribute to the growing literature on problems of agency within family firms. Third, this study contributes to the empirical literature of corporate governance in family firms for an understudied region that has gained relevance in the world economy.Publicación Acceso abierto The Cost of Equity in Emerging Markets: The Case of Latin America(Universidad de los Andes, 2013) Garay, Urbi; González Ferrero, Maximiliano; Rosso Murillo, John WilliamWe applied ten methods to calculate the cost of equity in a set of companies included in the MSCI1 emerging markets list from five countries in Latin America. The methods modify the discount rate obtained using the standard Capital Asset Pricing Model (CAPM) by adjusting for country risk premiums. We found that country effects are more important than industry effects in Latin America. This work also contributes to a better understanding of how different ways of calculating country risk can affect a firm¿s cost of equity. Further-more, it gives empirical evidence for specific country and industry determinants of the cost of equity that are not explicitly treated in the extant literatura.Publicación Acceso abierto The Role of Heirs in Family Businesses: The Case of Carvajal(Universidad de los Andes, 2009) González Ferrero, Maximiliano; Trujillo Dávila, María Andrea; Guzmán Vásquez, Álvaro AlexanderIn this article we study why, contrary to international empirical evidence, CEO successions at Carvajal have been successful, although all the CEOs have belonged to the founding family. We develop a theoretical model which explains, given certain conditions, that the efforts of heirs can be similar to those of the founder and greater than outsiders'. We point out the importance of private knowledge, the non-monetary benefit of managing the firm, and the personal abilities, as determinants of the productivity achieved by family management.Publicación Acceso abierto Family Firms and Financial Performance: The Cost of Growing(Universidad de los Andes, 2011) González Ferrero, Maximiliano; Guzmán Vásquez, Álvaro Alexander; Pombo Vejarano, Carlos; Trujillo Dávila, María AndreaThis study examines the relationship between financial performance and family involvement for 523 listed and non-listed Colombian firms from 1996-2006. Using a detailed database and performing several panel data regression models, we have found that family firms exhibit better financial performance on average than non-family firms when the founder is still involved in operations, although this effect decreases with firm size. With heirs in charge, there is no statistical difference in financial performance. Both direct and indirect owner-ship (control through pyramidal ownership structures within family business groups) affect a firm's financial performance positively. However, this positive effect decreases with firm size, and some kinds of family involvement appear to make firm growth expensive.Publicación Acceso abierto Internet-Based Corporate Dosclosire and Market Value: Evidence from Latin America(Universidad de los Andes, 2010) Garay, Urbi; González Ferrero, MaximilianoWe examine the relationship between corporate disclosure using the internet and firm value, and evaluate the relatively understudied corporate use of the internet by firms listed in the seven largest stock markets of Latin America (Argentina, Brazil -Bovespa and No-vomercado- Colombia, Chile, Mexico and Peru). We construct an internet-based corporate disclosure index (ICDI) for each firm listed in the aforementioned stock markets (for a total of 1,318 firms) and find that that an increase of 1% in the ICDI results in an average increase of 0.62% in Tobin's Q. These findings are robust after considering the potential endogeneity of our regression variables and after performing a battery of other robustness checks. Our results are consistent with the theoretical model of La Porta, et al. (2002) that related good corporate governance to higher investor confidence. These findings are relevant not only for Latin America but also for other emerging markets and regions in the process of attempting to improve their corporate disclosure practices. Two direct insights to policy makers and practitioners follow from our analysis: firstly, managers in weak investor protection environments could differentiate their firms by voluntarily disclosing financial and corporate governance information through their corporate websites; and secondly, our internet-based measure of corporate disclosure gives investors a quantitative tool to better assess Latin American firms.Publicación Acceso abierto Dividend Policy and Ownership Structure in Latin America(Universidad de los Andes, 2010) González Ferrero, Maximiliano; Molina Manzano, Carlos Alberto; Pablo, EduardoPublicación Acceso abierto Cultural Distance and its Effect on Cross-Border Entry Mode: Latin American Evidence(Universidad de los Andes, 2013) Pablo, Eduardo; Garay, Urbi; González Ferrero, MaximilianoThis paper studies if "cultural distance" between two firms determines the entry mode of a foreign organization. We study two different modes of entering a market: cooperative agreements and acquisitions. We analyze a database that gathers 1,292 cooperative ventures and acquisitions in ten Latin American countries from 1998 to 2004. Evidence is consistent with firms selecting cooperative agreements over acquisitions the larger the cultural distance, particularly when we proxy cultural distance in two dimensions: individualism-collectivism and masculinity-femininity. Results hold when we run a logistic regression controlling for other variables among them, the Heritage Foundation Indexes, and a same-language dummy.Publicación Acceso abierto Game-Theoretic Analysis of the Mattel-Radica Acquisition(Universidad de los Andes, 2008) González Ferrero, Maximiliano; Mayorca, María A.; Vera Sandoval, Andrés AlejandroThe aim of this paper is twofold: first, we analyze the recent Mattel-Radica acquisition within the Gans and Stern (2000) game-theoretic model; and second, we argued that this case-study analysis is useful to add to the M&A literature a new dimension: technology and knowledge as a bargaining tool. The case-study approach used here allows us to provide a general framework to better understand M&A in the "market of ideas".