Corporate restructuring: empirical evidence on the approval of the reorganization plan

Quando uma empresa apresenta um plano de recuperação judicial, espera-se que o plano seja aprovado por seus credores. Neste artigo, apresenta-se a evidência empírica sobre a votação dos credores trabalhistas, com garantia real e quirografário e a probabilidade de aprovação do plano de recuperação judicial no Brasil. O estudo aborda uma análise descritiva das principais características dos planos de recuperação judicial por classe de voto. Utilizando uma amostra de 120 planos de recuperação judicial apresentados por empresas entre 2005 e 2014, os resultados sugerem que: credores trabalhistas estão propensos a aprovar o plano de recuperação mesmo quando o plano é rejeitado pelas demais classes; planos com propostas de pagamento mais heterogêneas para as três classes de credores possuem menor chance de serem aceitos; a chance de aprovação do plano diminui nos casos em que mais credores quirografários participam da votação; e planos com proposta de venda de ativos possuem maior chance de serem aprovados. Finalmente, maior concentração da dívida na classe com garantia real diminui a chance de aprovação do plano, e o contrário ocorre na classe quirografária.When a corporation presents a reorganization plan, it expects its creditors to approve the plan. This paper provides empirical evidence regarding the likelihood of approval based on reorganization plans for creditors in Brazil that require approval by employees; and by secure and unsecure debtholders. This paper involves a descriptive analysis of the main characteristics of reorganization plans by type of vote. Using a sample of 120 reorganization plans proposed by corporations from 2005 to 2014, we find that the labor class of creditors is likely to approve the reorganization plan even when the plan is rejected; plans with more heterogeneous payment for classes are less likely to be accepted; plans are less likely to be accepted when there are more unsecure creditors; and plans with divestment proposals are more likely to be accepted. Finally, as expected given the seniority position of secured debt, plans are less likely to be accepted when the portion of secured debt is higher, and the reverse is true for unsecured debt

Corporate Financial Distress and Reorganization: A Survey of Theoretical and Empirical Contributions

Purpose – This paper presents both a theoretical and empirical review of the bankruptcy and reorganization literature. We point out the main articles developed in the field and present a group of studies carried out after the approval of the new bankruptcy law in Brazil. Design/methodology/approach – This paper provides a survey of the literature on bankruptcy and corporate reorganization. We investigate classic and recent papers in the field and present the results of some Brazilian studies that consider the announcement of the Brazilian bankruptcy law in 2005. Findings – We show that information asymmetry, coordination problems, and heterogeneity between creditors are pivotal to the resolution of financial distress. Moreover, the choice of restructuring is made according to the least-cost alternative. We discuss the practical implications of the literature by analyzing three cases of reorganization in Brazil and reveal that the complexity of each case can drive the decision to approve or reject the reorganization plan. Originality/value – We investigate the evolution of the bankruptcy and reorganization literature and provide a survey that explores both the international and Brazilian literature

Window dressing em fundos de investimento no Brasil

This paper investigates the presence of window dressing in the Brazilian investment fund market, focusing on equity funds. Window dressing is a practice that presents a particular portfolio composition to the market, which is different from that held by the fund in the reporting period. Just before the end of the period, fund managers change their positions with the aim of presenting safer, more profitable securities portfolios. We believe that there is a lack of empirical evidence on this topic in Brazil. Previous research focuses on diversification, style analysis, fund portfolio turnover, manager profile, and performance. Therefore, we believe that our paper is pioneering in presenting results on window dressing in Brazil. With the presence of window dressing, the market may signal distorted results to investors and guide their allocations towards funds in which they would not invest in the absence of such practices. Moreover, the adoption of window dressing may increase transaction costs and thus destroy value. Our results present a connection with previous studies by Bremer and Kato (1996), O’Neal (2001), Ng and Wang (2004), Ortiz, Sarto, and Vicente (2012), and Agarwal, Gay, and Ling (2014). This paper provides evidence of window dressing in Brazilian equity funds and proposes an empirical study to verify the presence of the practice between 2010 and 2016, using market model residuals, rank gap, and backward holding return gap analysis techniques. In short, our results are consistent with window dressing practices in funds managed by small companies that were losers against the Bovespa Index and presented a high tracking error in the period.Este artigo busca aferir a existência de window dressing no mercado brasileiro de fundos de investimento em ações. O window dressing é uma prática que apresenta determinada composição do portfólio ao mercado, diferente daquela mantida pelo fundo no período de reporte. Momentos antes do fechamento do período, gestores de fundos alteram suas posições com objetivo de apresentar em carteira papéis eventualmente mais seguros ou mais rentáveis. Acreditamos que existe uma lacuna de resultados empíricos para o tema proposto por esta pesquisa no Brasil. Pesquisas anteriores enfatizam diversificação, análise de estilo, rotatividade da carteira do fundo, papel dos gestores e desempenho. Portanto, acreditamos que o presente estudo é pioneiro ao apresentar resultados sobre window dressing no Brasil. Com a existência de window dressing, o mercado pode sinalizar resultados distorcidos e guiar a alocação de recursos por parte dos investidores em fundos que eles não investiriam na ausência de tais práticas. Em adição, a adoção de window dressing pode apresentar aumento nos custos de transação e, portanto, destruir valor. Os resultados encontrados apresentam conexão com as pesquisas prévias de Bremer e Kato (1996), O’Neal (2001), Ng e Wang (2004), Ortiz, Sarto e Vicente (2012) e Agarwal, Gay e Ling (2014). Este artigo apresenta evidências favoráveis à prática de window dressing nos fundos de investimento em ações no Brasil e propõe um estudo empírico para aferir a existência da prática de window dressing entre 2010 e 2016 por meio das técnicas de análise de resíduos, diferença entre rankings e diferença de retornos reversos. Em suma, encontramos resultados consistentes para a prática de window dressing em fundos de investimento geridos por instituições pequenas, perdedores ante o Índice Bovespa e que apresentaram alto tracking error no período

The CEO’s origin and fame in relation to company performance and market perception

This article investigated decisions to change chief executive officer (CEO) and the relationships between the characteristics of the new CEO chosen and both company performance and stock market perceptions. Our study aims to broaden the understanding in an area that remains underexplored by the literature. In particular, we present a new direction for the study of Malmendier and Tate (2009) by addressing the question of superstar CEOs considering the market’s perception regarding the hiring of an executive and their performance in the new company. The article highlights a new research question that permeates the market’s perception with regard to changing executives classified as superstars. In addition, the study connects the literature on superstar CEOs and changing executives, presenting new findings for the theme. The results obtained provide new findings for the literature and elucidate that superstar CEOs are positively evaluated by the market at the time of the hiring announcement. However, these executives do not show better performance than the other companies in the sector in subsequent periods, which corroborates and extends the negative aspects found by Malmendier and Tate (2009). The methodology used was an event study, OLS, Logit, and Probit. This article highlights that bigger companies with better operational performance have a greater probability of choosing a new CEO with superstar status in situations of changing executives. CEOs of external origin and classified as superstars are, on average, better evaluated than their peers by the market in the event window relating to the hiring announcement. However, the performance of these executives may fall short of the results calculated for the sector average. The aforementioned results broaden the discussion regarding decisions to change executives and highlight new findings about the role of the CEO’s origin and their status of recognition and fame.Este artigo investigou as decisões de trocas de chief executive officer (CEO) e as relações entre as características do novo CEO escolhido com o desempenho da empresa e as percepções do mercado de ações. Nosso estudo visa ampliar os entendimentos em uma área ainda pouco explorada pela literatura. Em especial, apresentamos um novo direcionamento para o estudo de Malmendier e Tate (2009) ao abordar a questão do CEO superstar considerando a percepção do mercado acerca da contratação do executivo e seu desempenho na nova empresa. O artigo evidencia uma nova questão de pesquisa que permeia a percepção do mercado acerca da troca de executivos classificados como superstar. Em adição, o estudo conecta as literaturas sobre CEOs superstars e troca de executivos, apresentando novos achados para a temática. Os resultados obtidos trazem novos achados para a literatura e elucidam que CEOs superstars são positivamente avaliados pelo mercado no anúncio da contratação. Contudo, tais executivos não demonstram melhor desempenho que as demais empresas do setor em períodos posteriores, o que corrobora e amplia os aspectos negativos encontrados por Malmendier e Tate (2009). A metodologia usada foi estudo de eventos, MQO, Logit e Probit. O presente artigo evidencia que empresas maiores e com melhor desempenho operacional possuem maior probabilidade de escolher um novo CEO com status de superstar em situações de troca de executivos. CEOs de origem externa e classificados como superstar são, em média, mais bem avaliados do que seus pares pelo mercado na janela de evento referente ao anúncio de contratação. Contudo, o desempenho de tais executivos pode ficar aquém dos resultados apurados para a média dos setores. Os resultados supracitados ampliam a discussão a respeito das decisões de troca de executivos e salientam novos achados sobre o papel da origem do CEO e seu status de reconhecimento e fama

Dificuldade financeira e recuperação de empresas:: uma pesquisa de contribuições teóricas e empíricas

Purpose – This paper presents both a theoretical and empirical review of the bankruptcy and reorganization literature. We point out the main articles developed in the field and present a group of studies carried out after the approval of the new bankruptcy law in Brazil. Design/methodology/approach – This paper provides a survey of the literature on bankruptcy and corporate reorganization. We investigate classic and recent papers in the field and present the results of some Brazilian studies that consider the announcement of the Brazilian bankruptcy law in 2005. Findings – We show that information asymmetry, coordination problems, and heterogeneity between creditors are pivotal to the resolution of financial distress. Moreover, the choice of restructuring is made according to the least-cost alternative. We discuss the practical implications of the literature by analyzing three cases of reorganization in Brazil and reveal that the complexity of each case can drive the decision to approve or reject the reorganization plan. Originality/value – We investigate the evolution of the bankruptcy and reorganization literature and provide a survey that explores both the international and Brazilian literature.Objetivo – Este artigo apresenta uma análise teórica e empírica da literatura sobre falência e recuperação. Destacamos os principais artigos desenvolvidos na área e apresentamos um grupo de pesquisas realizadas após a aprovação da nova lei de falências no Brasil. Metodologia – Este artigo fornece uma pesquisa da literatura sobre falência e recuperação de empresas. Investigamos trabalhos clássicos e recentes na área e apresentamos os resultados de alguns estudos brasileiros, considerando o anúncio da lei de falências brasileira em 2005. Resultados – Demonstramos que a assimetria das informações, os problemas de coordenação e a heterogeneidade entre os credores são fundamentais para a resolução de dificuldades financeiras. Além disso, a escolha da reestruturação é feita de acordo com a alternativa de menor custo. Discutimos as implicações práticas das anotações na literatura analisando três casos de recuperação no Brasil e revelamos que a complexidade de cada caso pode influenciar a decisão de aprovar ou rejeitar o plano de recuperação. Contribuições – Investigamos a evolução da literatura sobre falências e recuperação e fornecemos uma pesquisa que explora a literatura internacional e brasileira

Corporate restructuring: empirical evidence on the approval of the reorganization plan

When a corporation presents a reorganization plan, it expects its creditors to approve the plan. This paper provides empirical evidence regarding the likelihood of approval based on reorganization plans for creditors in Brazil that require approval by employees; and by secure and unsecure debtholders. This paper involves a descriptive analysis of the main characteristics of reorganization plans by type of vote. Using a sample of 120 reorganization plans proposed by corporations from 2005 to 2014, we find that the labor class of creditors is likely to approve the reorganization plan even when the plan is rejected; plans with more heterogeneous payment for classes are less likely to be accepted; plans are less likely to be accepted when there are more unsecure creditors; and plans with divestment proposals are more likely to be accepted. Finally, as expected given the seniority position of secured debt, plans are less likely to be accepted when the portion of secured debt is higher, and the reverse is true for unsecured debt. © 2017 Departamento de Administrac¸ao, ˜ Faculdade de Economia, Administrac¸ao˜ e Contabilidade da Universidade de Sao˜ Paulo – FEA/USP. Published by Elsevier Editora Ltda. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)

The Role of Bond Covenants and Short-Term Debt: Evidence from Brazil

Abstract This paper examines the relationship between covenants, short-term and long-term debt with companies which face growth opportunities. Using a sample of 159 Brazilian corporate bonds, we found evidence that: 1) Covenants and short-term debt are substitute tools to minimize agency conflict, since they presented a negative and significant relation and; 2) The negative relation between short-term debt and growth opportunities might be attenuated in the presence of covenants

Relations between CEO characteristics and mergers and acquisition decisions in Brazilian companies

This paper investigates the probability of companies to perform Mergers & Acquisitions (M&As) based on the characteristics of the CEO.. We use a sample of 794 CEOs of nonfinancial firms, which were listed on the B3 from 2000 to 2017. We adopt a descriptive approach and run logistic regressions to examine the probability of a company performing M&As, given the characteristics of its CEO. We show that CEOs with finance backgrounds are less likely to perform M&As. We find no statistically significant correlations for other CEO’s characteristics, such as executive tenure, age, education, participation as chair of the board, previous experience as an entrepreneur or being a shareholder of the acquiring company