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This study is designed with the data of Interbrand for ranking top 100 global brands. In this study, the linkage between brand values and financial performance was estimated using different performance measures that include both stock market and operating performance using Fuzzy Set Qualitative Comparative Analysis (fsQCA) technique. The study investigates the effect of brand value on profitability and shareholder. It is observed that the firms that have superior operating performance result in greater brand valuation. Performance of firms measured through profitability is found to be a significant factor in brand valuation. Brand valuation is also found to be significant determinant of profitability. Thus, higher brand quality improves the likelihood of repurchases and in turn improved cash flows. Firms with high agency conflicts tend to have lower brand value. Higher market valuation positively impacts brand valuation in the context of lower leverage and agency costs. The linkage of brand value to firm performance is the justification for marketer's investments toward branding initiatives as a mechanism that creates value. This study is the first of its kind to examine the impact of agency costs on brand value using fsQCA technique to understand valuation impact of brands. To measure the effect of branding and marketing initiatives of the firms on financial performance, this study integrated both econometric and financial modeling. [ABSTRACT FROM AUTHOR]

Shareholder inspection rights allow a shareholder to access the relevant documents of the company in which they hold an interest, so as to address the problem of information asymmetry and reduce the agency costs inherent in the corporate structure. While Chinese corporate governance and American corporate governance face different sets of agency cost problems, this Article shows that shareholder inspection rights play an important role in both China and the United States. On the books, while shareholder inspection rights in both countries are broadly similar, there are some important differences on issues such as the proper purpose requirement. The empirical analysis of this Article further sheds light on how inspection rights operate on the ground. A good number of inspection cases are filed in both China and in Delaware. These cases are resolved by the courts relatively quickly. While inspection rights in both countries are frequently used as a presuit discovery device, the types of subsequent litigation that can be filed in each country are quite different. Efforts are made to explain, and draw implications from, the similarities and differences on shareholder inspection rights between the two countries. [ABSTRACT FROM AUTHOR]

A growing number of technology companies, including Google, Zillow, and Snap, have issued stock that does not allow investors to vote on corporate decisions. But there is fundamental disagreement among scholars and investors about whether nonvoting stock is beneficial or harmful. Critics argue that nonvoting shares perpetually insulate corporate insiders from influence and oversight, and therefore increase agency costs. By contrast, proponents contend that nonvoting shares may provide benefits that exceed these agency costs, such as enabling corporate insiders to pursue their long-term vision for the company without interference from outside shareholders. This Article offers a novel perspective on this debate. It demonstrates an important and previously unrecognized benefit of nonvoting stock: that it can be used to make corporate governance more efficient. This is because nonvoting stock allows companies to divide voting power between informed shareholders who value their voting rights and uninformed, "weakly motivated" shareholders who do not. When this efficient sorting happens, a company will lower its cost of capital by reducing agency and transaction costs. Specifically, informed investors will pay more for voting stock that is not diluted by the votes of uninformed, weakly motivated investors; indeed, a company may even entice informed investors to invest by offering two classes of shares. Likewise, weakly motivated investors will gravitate toward shares that do not require them to incur the costs associated with voting, especially because nonvoting stock tends to trade at a discount relative to voting stock. In other words, the company that issues nonvoting shares for its uninformed shareholders will make itself more valuable. This insight has several implications for the law. Most importantly, this Article contends that recent proposals to restrict or deter companies from issuing nonvoting shares should be rejected. Under certain circumstances, nonvoting stock has beneficial functions, and therefore, restricting its use may impede efficient corporate structuring. [ABSTRACT FROM AUTHOR]

Empirical studies of acquisitions consistently find that public company bidders often overpay for targets, imposing significant losses on bidder shareholders. Numerous studies have connected bidder overpayment with managerial agency costs and behavioral biases that reflect management self-interest. For purposes of corporate law, these concerns implicate the behavior of fiduciaries--the officers and directors of the acquiring entity--and raise questions about whether those fiduciaries are fulfilling their duty of loyalty. To address comparable sell-side concerns, the Delaware courts developed an intermediate standard of review known as enhanced scrutiny. There has been little exploration, however, of whether the rationales for applying enhanced scrutiny to the actions of sell-side fiduciaries extend to comparable fiduciaries on the buy-side. This Article addresses this long-neglected question. Drawing upon the history of Delaware jurisprudence on enhanced scrutiny, it argues that enhanced scrutiny should extend to the decisions of buy-side fiduciaries. The Article also recognizes that, although doctrinally coherent, applying enhanced scrutiny to buy-side decisions would open the door to well-documented stockholder litigation pathologies that have undermined the effectiveness of enhanced scrutiny for sell-side decisions. To address these pathologies, the Delaware courts have recently encouraged the use of fully informed stockholder votes on the sell-side to lessen litigation risk. This Article reasons that a primary argument in favor of extending enhanced scrutiny to buy-side decisions rests not on the ability of the litigation itself to generate superior outcomes, but rather as an inducement to more frequent buy-side votes. This argument builds on recent empirical literature which finds that stockholder voting can provide an important counterbalance against the self-interest and biases that lead to bidder overpayment. [ABSTRACT FROM AUTHOR]

This paper aims to reassess the dogma of creditor protection in light of the corporate finance principles and theories. To this end, I set forth two methodological premises to reach a substantive conclusion on the optimal creditor protection strategies. First, I draw a double-layered taxonomy of classes of creditors; second, I underscore the importance of legal systems and the statutory allocation of powers and authority on creditor-sensitive corporate decisions. The corporate finance literature shows that (1) debt matters for the firm's value maximization and governance and (2) the optimal capital structure is influenced by various determinants. Creditor protection and debt governance serve as determinants of financial behaviour. Legal strategies can positively or negatively determine the cost of capital. Against this framework, I argue that ex ante corporate law techniques of creditor protection hamper firms' financing maximization, whereas ex ante contractual arrangements bolster optimal capital supply. Ex post creditor protection is applicable only to distressed firms and has positive effects on capital structure when it involves directors, whereas it is rather cumbersome and unjustified when it impinges upon stockholders. Alternative, non-corporate law techniques may efficiently outperform strategies based on unlimited shareholder liability. I conclude that, while creditor protection techniques are a function of the interplay between legal environment and the specific features of each class of creditors, the case against ex ante corporate law, and toward ex ante contractual strategies, is substantial. Corporate finance forces should drive the legal design and assessment of this function. [ABSTRACT FROM AUTHOR]

The aim of this paper is to survey what are the potential benefits and drawbacks of the most common mechanisms a shareholder can use to monitor and control a manager according to the agency theory. Despite the wide array of policies and instruments shareholders have at their disposal, all the mechanisms exhibits inherit flaws which limit their applicability. From the powerful boards to the ownership structure, management compensation plans, capital structure and market for corporate control, all are able to some degree to mitigate the conflict between shareholders and managers but raise others dilemmas regarding applicability and effectiveness, inquiring additional consideration. Ultimately there isn't a single solution for every environment but rather a specific mix according to the specific environment of each company, so policy makers need to take into consideration all the characteristics of the firm and only after issue recommendations, norms and laws. [ABSTRACT FROM AUTHOR]

Many scholars have found a negative relationship between a firm's size and its value, as measured by Tobin's q. This result is called the size discount. There are hypotheses about why the size discount exists, but none have been rigorously empirically tested. This paper argues that the size discount is created by the inability of shareholders to minimize agency costs in larger companies. Statistical tests suggest that the size discount only appears in large firms with managers that impose excessive agency costs upon their shareholders. Empiricists who use Tobin's q to proxy for growth opportunities may need a different proxy. [ABSTRACT FROM AUTHOR]

The article discusses the alternative model called a common agency theory for public corporations in California. This agency is created when multiple principals influence a single agent describing a shareholder/management relationship with competing preferences on corporate management. Also explained is the investor activities and arguments that increasing shareholder power lead to the decrease of agency costs caused by management expropriation.

This article investigates the impact on share prices when news released on the specialized media indicates that the interests of controlling and minority shareholders groups diverge. Methodologically, we analyze 24 announcements of conflicts between shareholder groups in Brazil using two event study methodologies. We find strong support for our hypothesis that such news constitutes a proxy for relevant agency costs taking place, leading to a higher perception of risk and reduced share price. To our knowledge, this is the first article to estimate the impact of specific agency costs between controlling and minority shareholders in an environment characterized by concentrated ownership structures. The article is relevant for all capital markets' investors, as well as for analysts and other capital markets' agents. For policy makers and practitioners, our results provide evidence on the potential corporate value loss owing to conflicts between shareholders groups. As a result, they reinforce the argument for the adoption of good corporate governance practices, in order to avoid corporate value destruction resulting from problems between different shareholding groups. The main author is a professor at the School of Economics, Management and Accounting of University of São Paulo (FEA/USP) in Corporate Governance courses at both graduate and undergraduate level. In addition, he is Executive Coordinator of the Center for Corporate Governance Research of Fipecafi (CEG – www.ceg.org.br), Vice-President of the Brazilian Society of Finance (www.sbfin.org.br) and Senior Researcher of the Brazilian Institute of Corporate Governance (IBGC – www.ibgc.org.br). He is author of several books and articles on corporate governance, and writes a monthly column on corporate governance issues for Capital Aberto magazine, one of the most prominent capital markets' magazines in Brazil, making him well known among the corporate governance community in Brazil and Latin America. All persons involved with capital markets, media and policy makers should take note of these results, as most have corporate environments characterized by controlling shareholders, and their relationship with minority shareholders can be a potential source of relevant value destruction. [ABSTRACT FROM AUTHOR]

We study the determinants of the dividend payout ratio considering a model that minimizes the sum of transaction and agency costs. Using a cross-sectional analysis on a sample of 60 Chilean public traded companies from 1986 to 1992, we examine the relationship between the dividend payout ratio and the expected growth rate, the beta, the percentage of shares helds by insiders and the number of stockholders. We find a positive and statistically significant relationship between the dividend payout ratio and the expected growth rate, which can be consistent with the signaling hypothesis. [ABSTRACT FROM AUTHOR]