Laws vs. Contracts: Legal Origins, Shareholder Protections, and Ownership Concentration in Brazil, 1890-1950
39 Pages Posted: 25 Jan 2008
Date Written: January 22, 2008
Abstract
The early development of large multidivisional corporations in Latin America required much more than capable managers, new technologies, and large markets. Behind such corporations was a market for capital in which entrepreneurs had to attract investors to buy either debt or equity. This paper examines the investor protections included in corporate bylaws that enabled corporations in Brazil to attract investors in large numbers, thus generating a relatively low concentration of ownership and control in large firms before 1910. Archival evidence such as company statutes and shareholder lists document that in many Brazilian corporations voting rights provisions, in particular, maximum vote provisions and graduated voting scales (that provided for less than proportional votes as shareholdings increase), balanced the relative voting power of small and large investors. In companies with such provisions the concentration of ownership and control is shown to have been significantly lower than in the average company. Overall, from the sample of Brazilian companies studied it seems like the concentration of control was significantly lower before 1910 than what it is today.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Audit Committee, Board of Director Characteristics, and Earnings Management
By April Klein
-
Audit Committee, Board of Director Characteristics, and Earnings Management
By April Klein
-
Audit Committee Composition and Auditor Reporting
By Joseph V. Carcello and Terry L. Neal
-
Corporate Governance and Accounting Scandals
By Anup Agrawal and Sahiba Chadha
-
Audit Committee Characteristics and Auditor Reporting
By Joseph V. Carcello and Terry L. Neal
-
Earnings Management and Corporate Governance: The Roles of the Board and the Audit Committee
By Biao Xie, Wallace N. Davidson, ...
-
Restoring Trust after Fraud: Does Corporate Governance Matter?
-
Board Characteristics, Accounting Report Integrity, and the Cost of Debt
By Ronald C. Anderson, Sattar Mansi, ...
-
Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?
By Mark L. Defond, Rebecca N. Hann, ...