A Decade of Corporate Governance in Brazil: 2010-2019

Brazilian Review of Finance, vol. 21(4), 2023, Forthcoming

Northwestern Law & Econ Research Paper No. 23-19

15 Pages Posted: 13 Oct 2023 Last revised: 7 Dec 2023

See all articles by Bernard S. Black

Bernard S. Black

Northwestern University - Pritzker School of Law

Antonio Gledson De Carvalho

Fundacao Getulio Vargas School of Business at Sao Paulo

Humberto Gallucci Netto

Fundacao Getulio Vargas School of Business at Sao Paulo

Date Written: September 19, 2023

Abstract

We take advantage of the Brazilian mandatory corporate governance (CG) reporting system to build an overall Brazil Corporate Governance Index (BCGI) and subindices (CGIs), and track changes in firms’ scores over the 10-year period from 2010-2019. We show that overall CG level improved significantly between 2010 and 2019, with most of the improvement over the first part of this period. The improvement has two sources: an increase in the proportion of high-standard listings (Novo Mercado and Level 2, NML2) versus low-standard listings (Level 1 and regular, L1R), and within-firm improvement in CG practices. In the first half of the sample period, both NML2 and L1R firms improved CG practices considerably. Overall improvement in the second half of the sample period reflects an increasing proportion of NML2 firms, plus gradual improvement in L1R CG levels; with nearly constant NML2 levels. Improvements were stronger for Board Procedure and Disclosure. Firms in both listings improved their CG. Overall improvement was stronger in NML2 than in L2R, but was concentrated in the period from 2010-2015.

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

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

Suggested Citation

Black, Bernard S. and De Carvalho, Antonio Gledson and Gallucci Netto, Humberto, A Decade of Corporate Governance in Brazil: 2010-2019 (September 19, 2023). Brazilian Review of Finance, vol. 21(4), 2023, Forthcoming , Northwestern Law & Econ Research Paper No. 23-19, Available at SSRN: https://ssrn.com/abstract=4576296

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)

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)

Humberto Gallucci Netto

Fundacao Getulio Vargas School of Business at Sao Paulo ( email )

R Itapeva, 474 11º. andar
São Paulo, São Paulo 01332-000
Brazil

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