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The Corporate Governance of Privately Controlled Brazilian Firms


Bernard S. Black


Northwestern University - School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

Antonio Gledson De Carvalho


Fundacao Getulio Vargas School of Business at Sao Paulo

Érica Gorga


Yale Law School

December 1, 2009

as published in Revista Brasileira de Finanças, Vol. 7, 2009
U of Texas Law, Law and Econ Research Paper No. 109
Cornell Legal Studies Research Paper No. 08-014
ECGI - Finance Working Paper No. 206/2008

Abstract:     
We provide an overview of the corporate governance practices of Brazilian public companies, based primarily on an extensive 2005 survey of 116 companies. We focus on the 88 responding Brazilian private firms which are not majority owned by the state or a foreign company. We identify areas where Brazilian corporate governance is relatively strong and weak. Board independence is an area of weakness: The boards of most Brazilian private firms are comprised entirely or almost entirely of insiders or representatives of the controlling family or group. Many firms have zero independent directors. At the same time, minority shareholders have legal rights to representation on the boards of many firms, and this representation is reasonably common. Financial disclosure lags behind world standards. Only a minority of firms provide a statement of cash flows or consolidated financial statements. However, many provide English language financial statements, and an English language version of their website. Audit committees are uncommon, but many Brazilian firms use an alternate approach to ensuring financial statement accuracy – establishing a fiscal board. A minority of firms provide takeout rights to minority shareholders on a sale of control. Controlling shareholders often use shareholders agreements to ensure control.

A Portuguese language version of this article is available at http://ssrn.com/abstract=1528183

For a less detailed version of this paper, with statistical tests for differences between subsamples intended for an international audience, see Black, de Carvalho and Gorga, Corporate Governance in Brazil, at http://ssrn.com/abstract=1152454

Number of Pages in PDF File: 48

Keywords: Brazil, corporate governance, boards of directors, minority shareholders

JEL Classification: G18, G30, G34, G39, K22, K29

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Date posted: April 16, 2008 ; Last revised: August 7, 2013

Suggested Citation

Black, Bernard S. and De Carvalho, Antonio Gledson and Gorga, Érica, The Corporate Governance of Privately Controlled Brazilian Firms (December 1, 2009). U of Texas Law, Law and Econ Research Paper No. 109; as published in Revista Brasileira de Finanças, Vol. 7, 2009; U of Texas Law, Law and Econ Research Paper No. 109; Cornell Legal Studies Research Paper No. 08-014; ECGI - Finance Working Paper No. 206/2008. Available at SSRN: http://ssrn.com/abstract=1003059

Contact Information

Bernard S. Black (Contact Author)
Northwestern University - School of Law ( email )
375 E. Chicago Ave
Unit 1505
Chicago, IL 60611
United States
512-503-2784 (Phone)

Northwestern University - Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)
European Corporate Governance Institute (ECGI)
Brussels
Belgium
Antonio Gledson De Carvalho
Fundacao Getulio Vargas School of Business at Sao Paulo ( email )
R. Itapeva, 474 - 7o. andar
Sao Paulo 01313-902
Brazil
+5511 3281-7767 (Phone)
Érica Gorga
Yale Law School ( email )
Yale Law School
P.O.Box 208215
New Haven, CT 06520
United States
203-9886500 (Phone)
HOME PAGE: http://www.law.yale.edu/faculty/EGorga.htm
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