How Universal is the Corporate Form? Reflections on the Dwindling of Corporate Attributes in Brazil

Abstract

The business corporation, a central pillar of modern capitalism, is deemed to have a set of defining features that are universal across different jurisdictions and ever more widely available. However, a close examination of legal developments in Brazil, one of the world’s largest economies, shows a surprisingly different picture. In the past decades, Brazil has significantly watered down all of the canonical elements of the corporate form, including limited liability and capital lock-in. After describing this phenomenon, I analyze it in view of efficiency and distributional considerations. In particular, I put forward the possibility that the blurring of the corporate attributes may be a second-best response to a weak institutional environment, which, among other things, fails to protect minority investors and curb externalities through regulation. The Article concludes by examining how the erosion of the corporate attributes in Brazil subverts our conventional understanding about the evolution of corporate law and the immutability of the corporate form.

Keywords: corporate law, limited liability, lock-in, comparative corporate governance

JEL Classification: K1, K22, G32, G38, N26, 016