This dissertation includes two related chapters that investigate corporate governance. In the first chapter, we examine the effectiveness of board monitoring on CEOs. It is widely believed that outsider boards are better monitors. In fact, regulations now require that the board of directors of publicly traded firms be composed of a majority of independent directors (or outsiders). However, this paper documents that an insider-dominated board can monitor the CEO just as well as an outsider board can when the firm's CEO is hired from outside. The results suggest that what matters is not so much as the structure of the board, but the "independence" between the board and the CEO it monitors. Specifically, we find that insider boards monitor more of their firms' CEOs if the CEO is hired from outside than from within. In addition, outsider boards monitor both inside and outside CEOs the same way. We also find little difference between insider and outsider boards when they monitor outside CEOs. The main contribution of this paper is to show that an insider board can be an effective monitor as long as it is independent of the CEO. In other words, what is important is board independence, not board structure per se. In chapter two, we examine the relation between the change in a firm's value and its CEO selection sources: internal promotion versus external hire in both high and low product competition environments. Our results show that firms will be better off hiring an outside CEO (external hire) when the firms operate in a low product competition industry. Specifically, the evidence shows that hiring an outside CEO for a firm in a low product competition industry will increase the firm's value by about 3% for the entire tenure of the CEO. The main contribution of this paper is to show that product market competition is an important factor in CEO selection.

Submitted by Claudia Bruschi Martins (claudiabruschi@gmail.com) on 2013-06-17T01:16:25Z No. of bitstreams: 1 Dissertação - Claudia Bruschi.pdf: 397234 bytes, checksum: 3e2548337f0f74878793de011f2eae06 (MD5) / Approved for entry into archive by Suzinei Teles Garcia Garcia (suzinei.garcia@fgv.br) on 2013-06-17T11:57:14Z (GMT) No. of bitstreams: 1 Dissertação - Claudia Bruschi.pdf: 397234 bytes, checksum: 3e2548337f0f74878793de011f2eae06 (MD5) / Made available in DSpace on 2013-06-17T12:30:35Z (GMT). No. of bitstreams: 1 Dissertação - Claudia Bruschi.pdf: 397234 bytes, checksum: 3e2548337f0f74878793de011f2eae06 (MD5) Previous issue date: 2013-05-17 / Esta dissertação investiga o efeito da pressão competitiva na eficiência de empresas estatais. Ela inova ao abordar um novo meio pelo qual a competição afeta a eficiência: na escolha de presidentes mais qualificados, que consequentemente afetam a eficiência da empresa estatal. Foi construído um painel de dados históricos (1973 a 1993) de empresas estatais brasileiras e de seus presidentes, com suas características observáveis. Os resultados indicam que a competição tem efeito ambíguo na escolha de CEOs mais qualificados, no entanto estes, por sua vez, afetam positivamente a eficiência daquelas empresas. / This dissertation investigates the effect of competitive pressure on the efficiency of state-owned enterprises (SOEs). It innovates, however, by approaching a new mean by which competition affects efficiency: the choice of the most qualified CEOs, which consequently affects the efficiency of such state-owned enterprises. A panel of historical data of Brazilian SOEs and their CEOs from 1973 to 1993 was created, gathering their observable characteristics. The results indicate that competition has ambiguous effect on the choice of more skilled CEOs.

In this dissertation, I first suggest an extension of the managerial rents model and more specifically the managerial skills typology that it offers. Building on research in international business, I propose adding country-specific skills (CSS) to this typology in addition to firm-specific, industry-specific, and generic skills. I define CSS as managers’ abilities that are applicable and specific to a particular national institutional context. Such skills are distinct from the other three types identified and are likely to influence managers’ performance and the performance of their firms. So if CSS are distinct skills, what are the implications for strategy and international business research? In an attempt to respond to this question, I conduct two empirical essays in which I examine the implications of this refinement of the typology of managerial skills for CEO selection and firms’ mergers and acquisitions (M&A) strategy. In the first empirical essay, I puzzle at the fact that although CSS constitute a barrier to high-level executive mobility across countries, there have been a growing number of foreign-born CEOs being appointed across the globe. Why are these individuals being selected for the post of CEO? Using information on the appointment of foreign-born and national CEOs from 2005 to 2010 among global 500 companies, I show that internationalization pressures help explain their selection and that two types of firms are likely to appoint foreign leaders: highly internationalized firms and firms that are likely to internationalize. In the second empirical essay, I examine the strategic implications of country-specific skills. Employing the same sample as the one used in the first empirical essay, I demonstrate that given that their mindset is likely to be less focused on firms’ home market, foreign-born CEOs may be prone to institute more changes in firms’ cross-border M&A strategy than their domestic counterparts. I also theorize on the moderating influence of CEOs’ insiderness.