dp0609 - FEP - Universidade do Porto

Given the above, our first step in our sampling procedures was to verify
which companies were listed in Euronext Lisbon as of 31 December, 2003 in
the two major markets (MCO-Mercado de Cotações Oficiais – the main
market -, and Segundo Mercado - the so-called “second market”). We found a
total of 57 companies, 50 of which were listed in the MCO, and 7 in the SM.
Appendix 1 details the list of firms included in our sample and shows both the
official and abbreviated names of these companies.
In the case of two financial companies in our initial sample, Banco
Santander Central Hispano and Espírito Santo Financial Group we found that
these companies were subject to Spanish and Luxemburguese laws,
respectively. For this reason, these firms did not publish a corporate
governance report. However, even if this was not the case, we excluded
financial companies from our sample, for reasons to be detailed further on.
Another financial firm, Banco Comercial dos Açores, delisted after 31
December 2003 following its acquisition by BANIF Comercial, SGPS so that
no financial reports were available after that date (we would exclude this firm
anyway for being a financial company).
Financial companies were excluded due to their regulatory and
accounting specificities. Financial ratios, for instance, cannot be interpreted in
the same way as those of other industries (Ruiz-Barbadillo et al., 2004). Also,
corporate governance characteristics of financial companies are very much
structured so as to have risk management as a corporate priority. According
to Peasnell et al. (2000b), financial firms are subject to a particular legal
environment and their governance mechanisms are substantially different
from those of other companies. For example, one of the major Portuguese
banks, Banco BPI, created both credit and market risk executive committees,
according to the information provided in the 2003 report. In addition, banks
are very much focused on meeting financial restrictions imposed by bank
regulators (in this case the Bank of Portugal).
Two listed football club companies (the so-called SAD-Sociedades
Anónimas Desportivas) were also excluded from our sample since the
financial years applicable for these companies do not end, as is the case for
the remaining listed firms, in December 31.
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