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The Evolution of Corporate Governance in Brazil

30 Pages Posted: 30 Nov 2012 Last revised: 3 Apr 2014

Bernard S. Black

Northwestern University - Pritzker 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

Getulio Vargas Foundation (FGV), Sao Paulo School of Economics, Students

Date Written: April 3, 2014

Abstract

We use extensive hand collected surveys reporting governance practices in 2004, 2006, and 2009 to build a broad corporate governance index and analyze the evolution of corporate governance in Brazil and the association between governance and firm value. We find that corporate governance practices improved significantly over this period. This evolution is due to two main factors: 1) growth in Novo Mercado and Level II (NM&L2) listings, mainly through IPOs by new firms, and 2) improved practices at non-NM&L2 firms, principally adopting governance elements required for NM&L2 listing. Governance practices for firms already listed on NM&L2 were stable. Adoption of the elements of our governance index that are required for NM&L2 listing predicts higher firm value. In contrast, adoption of the remaining elements of our index does not predict firm value. Thus, governance changes appear to respond to investor preferences.

Suggested Citation

Black, Bernard S. and De Carvalho, Antonio Gledson and Sampaio, Joelson Oliveira, The Evolution of Corporate Governance in Brazil (April 3, 2014). Northwestern Law & Econ Research Paper No. 12-22. Available at SSRN: https://ssrn.com/abstract=2181039

Bernard S. Black (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (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)

Joelson Oliveira Sampaio

Getulio Vargas Foundation (FGV), Sao Paulo School of Economics, Students ( email )

Rua Itapeva 474 s.1202
São Paulo
Brazil

HOME PAGE: http://eesp.fgv.br/

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