Facing the Regulators: Non-Compliance with Detailed Mandatory Compensation Disclosure in Brazil

44 Pages Posted: 13 Oct 2014 Last revised: 15 Oct 2014

Lucas Ayres B. de C. Barros

University of Sao Paulo

Alexandre Di Miceli da Silveira

Alvares Penteado School of Business (Fecap)

Patricia Maria Bortolon

Federal University of Espírito Santo

Ricardo P. C. Leal

Universidade Federal do Rio de Janeiro (UFRJ) - Alberto Luiz Coimbra Institute for Graduate Studies and Research in Engineering (COPPE)

Date Written: October 14, 2014

Abstract

A preliminary court injunction based on alleged personal security risks to managers and directors gave Brazilian public companies the option of non-compliance with the most sensitive part of newly mandated compensation disclosure rules. We find, however, no association between state-level crime data and non-compliance, which is possibly motivated by agency conflicts. Non-compliers tend to present lower corporate governance (CG) quality, higher ownership concentration, larger total assets, and less profitability. State and foreign owned companies are significantly less likely non-compliers. Shareholders correctly anticipated that lower CG quality firms were more likely to exercise their non-compliance option, but may have been negatively surprised when some higher CG quality firms did not comply.

Keywords: Compensation Disclosure, Compliance, Corporate Governance, Ownership Structure, Brazil

JEL Classification: G32, G34

Suggested Citation

Barros, Lucas Ayres B. de C. and da Silveira, Alexandre Di Miceli and Bortolon, Patricia Maria and Leal, Ricardo P. C., Facing the Regulators: Non-Compliance with Detailed Mandatory Compensation Disclosure in Brazil (October 14, 2014). Emerging Markets Finance and Trade, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2508935

Lucas Ayres Barreira de Campos Barros

University of Sao Paulo ( email )

Avenida Professor Luciano Gualberto, 908
São Paulo, São Paulo 05508-010
Brazil

Alexandre Di Miceli Da Silveira (Contact Author)

Alvares Penteado School of Business (Fecap) ( email )

Av. Liberdade, 532
Liberdade
São Paulo
Brazil
+5511945909031 (Phone)

HOME PAGE: http://lattes.cnpq.br/4773608871754250

Patricia Maria Bortolon

Federal University of Espírito Santo ( email )

Av. Fernando Ferrari
No. 514, Goiabeiras
Vitória
Brazil

Ricardo Pereira Câmara Leal

Universidade Federal do Rio de Janeiro (UFRJ) - Alberto Luiz Coimbra Institute for Graduate Studies and Research in Engineering (COPPE) ( email )

PO Box 68514
Rio de Janeiro, RJ 21941-972
Brazil
+55 21 3998-9871 (Phone)
+55 21 3998-9817 (Fax)

HOME PAGE: http://www.coppead.ufrj.br

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