Embraer Novo Mercado Analysis
Novo Mercado for Embraer
The migration of businesses to Bovespa’s Novo Mercado listing aims to make companies’ shares more attractive to investors due to higher standards of corporate governance, and consequently greater transparency and a higher degree of protection of minority shareholders. Among the main features of the Novo Mercado are: commitment to achieve in three years a minimum portion of 25% of shares in free float, and the conditions provided to majority shareholders in the disposal of the company’s control will have to be extended to all shareholders (Tag Along). In addition, companies listed in Novo Mercado must establish a two-year mandate for the entire Board of Directors, which must have five members or more, of which at least 20% (twenty percent) shall be independent members. It is worth noting that the Novo Mercado has a complementary relationship with Bovespa’s Levels 1 and 2 of corporate governance listings, but is different from these due to the requirement of all shares being ordinary. It is believed that the adoption of corporate governance best practices can increase the market value of the company as well as lower its risk. Greater transparency can stimulate a distinct perception of the market regarding the management of the company and a better interpretation of financial information, both for investors and for ratings agencies. This may result, respectively, in a more satisfactory level of liquidity and a better classification of company’s debt, therefore granting the company more access to credit with lower interest.
A study by Universidade Católica de Brasília (Catholic University of Brasilia) was developed to verify if corporate governance indeed makes a positive impact in companies’ market value and risk. It consisted in analyzing the companies that are listed in Ibovespa index and adopted corporate governance requirements by joining Bovespa’s corporate governance listings. The relationship of the impact of corporate
The migration of businesses to Bovespa’s Novo Mercado listing aims to make companies’ shares more attractive to investors due to higher standards of corporate governance, and consequently greater transparency and a higher degree of protection of minority shareholders. Among the main features of the Novo Mercado are: commitment to achieve in three years a minimum portion of 25% of shares in free float, and the conditions provided to majority shareholders in the disposal of the company’s control will have to be extended to all shareholders (Tag Along). In addition, companies listed in Novo Mercado must establish a two-year mandate for the entire Board of Directors, which must have five members or more, of which at least 20% (twenty percent) shall be independent members. It is worth noting that the Novo Mercado has a complementary relationship with Bovespa’s Levels 1 and 2 of corporate governance listings, but is different from these due to the requirement of all shares being ordinary. It is believed that the adoption of corporate governance best practices can increase the market value of the company as well as lower its risk. Greater transparency can stimulate a distinct perception of the market regarding the management of the company and a better interpretation of financial information, both for investors and for ratings agencies. This may result, respectively, in a more satisfactory level of liquidity and a better classification of company’s debt, therefore granting the company more access to credit with lower interest.
A study by Universidade Católica de Brasília (Catholic University of Brasilia) was developed to verify if corporate governance indeed makes a positive impact in companies’ market value and risk. It consisted in analyzing the companies that are listed in Ibovespa index and adopted corporate governance requirements by joining Bovespa’s corporate governance listings. The relationship of the impact of corporate