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The Corporate Governance of Privately Controlled Brazilian Firms

Bernard S. Black
University of Texas at Austin - School of Law; McCombs School of Business, University of Texas at Austin; European Corporate Governance Institute (ECGI); Northwestern University - School of Law; Northwestern University - Kellogg School of Management

Antonio Gledson De Carvalho
Fundacao Getulio Vargas School of Business at Sao Paulo

Erica Gorga
Getulio Vargas Foundation Law School at Sao Paulo


June 1, 2008

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.

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

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

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

Working Paper Series

Date posted: April 16, 2008 ; Last revised: November 10, 2009

Suggested Citation

Black, Bernard S., De Carvalho, Antonio Gledson and Gorga, Erica, The Corporate Governance of Privately Controlled Brazilian Firms (June 1, 2008). 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


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Contact Information

Bernard S. Black (Contact Author)
University of Texas at Austin - School of Law ( email )
Austin, TX 78705
United States
512-471-4632 (Phone)
McCombs School of Business, University of Texas at Austin
Austin, TX 78712
United States
European Corporate Governance Institute (ECGI)
Brussels Belgium
Northwestern University - School of Law
375 E. Chicago Ave
Chicago, IL 60611
United States
Northwestern University - Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States
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)
Erica Gorga
Getulio Vargas Foundation Law School at Sao Paulo ( email )
São Paulo, SP Brazil
Feedback to SSRN (Beta)


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