The Evolution of Corporate Governance in Brazil
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
Joelson Oliveira Sampaio
University of Sao Paulo (USP) - Department of Economics; Getulio Vargas Foundation (FGV) - São Paulo Law School of Fundação Getulio Vargas (DIREITO GV)
November 26, 2012
Northwestern Law & Econ Research Paper No. 12-22
We use three extensive hand collected surveys reporting governance practices in 2004, 2006, and 2009 to analyze the evolution of corporate governance in Brazil. We aggregate our governance information into six indices covering the main aspects of corporate governance: board structure, ownership, board procedures, related party transactions, shareholders rights and disclosure, and a broad index computed as their average. Our analysis shows that corporate governance practices improved significantly in the 2004-2009 period. This evolution is due to two main factors: 1) growth in Novo Mercado and Level II listings, mainly through the entry of new firms with high corporate governance practices (IPOs) and 2) improvement in the governance practices of the firms that were already listed. Governance practices for firms already listed on Novo Mercado and Level II were stable during that period. There were broad improvements for already listed firms, including board structure, board procedures, shareholder rights and disclosure. We also find that many firms in Novo Mercado/Level II exceed the minimum listing requirements. Finally, firms with venture capital sponsors adopt present better board procedures than other firms.
Number of Pages in PDF File: 24Accepted Paper Series
Date posted: November 30, 2012
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