Evolution and Determinants of Firm-Level Corporate Governance Quality in Brazil

41 Pages Posted: 22 Jun 2007

See all articles by Alexandre Di Miceli da Silveira

Alexandre Di Miceli da Silveira

Alvares Penteado School of Business (Fecap)

Ricardo P. C. Leal

The COPPEAD Graduate School of Business

Andre Carvalhal

The COPPEAD Graduate School of Business

Lucas Ayres B. de C. Barros

University of Sao Paulo

Date Written: June 20, 2007

Abstract

This paper analyzes the evolution and the determinants of firm-level corporate governance practices in Brazil from 1998 to 2004 using a broad corporate governance index. A key contribution is to examine the voluntary adoption of corporate governance guidelines under an almost "no listing requirements" environment in Brazil over a reasonable time span while most studies use cross-section samples over one or a few years. This is probably one of the few papers to investigate the impact of ownership structure on the quality of corporate governance practices segregating control and cash flow rights. Also, we perform regression analyses employing a robust panel-data GMM-based procedure that accounts for the main sources of endogeneity associated with our empirical design. Our data shows that overall firm-level corporate governance quality is steadily improving but is still low and that heterogeneity has increased during the sample period. Voluntarily joining stricter listing requirements, either by cross-listing in the US or by joining Bovespa's New Market, is positively associated with firm-level corporate governance quality. We found no clear evidence of the influence of other potential determinants, such as growth perspectives, firm size, firm value, and ownership structure, and we doubt the methodological reliability of previous findings suggesting that there is a causal relationship from value and ownership to corporate governance practices.

Keywords: Corporate Governance, Governance Mechanisms, Corporate Governance Index, Agency Theory, Ownership Structure

JEL Classification: G32, G34

Suggested Citation

Di Miceli da Silveira, Alexandre and Leal, Ricardo Pereira Câmara and Carvalhal, Andre and Barros, Lucas Ayres Barreira de Campos, Evolution and Determinants of Firm-Level Corporate Governance Quality in Brazil (June 20, 2007). Available at SSRN: https://ssrn.com/abstract=995764 or http://dx.doi.org/10.2139/ssrn.995764

Alexandre Di Miceli da Silveira

Alvares Penteado School of Business (Fecap) ( email )

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

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

Ricardo Pereira Câmara Leal

The COPPEAD Graduate School of Business ( email )

Rua Pascoal Lemme
355 - Cidade Universitária
Rio de Janeiro, Rio de Janeiro 21941-918
Brazil
39389871 (Phone)

Andre Carvalhal

The COPPEAD Graduate School of Business ( email )

Rua Pascoal Lemme
355 - Cidade Universitária
Rio de Janeiro, Rio de Janeiro 21941-918
Brazil

Lucas Ayres Barreira de Campos Barros (Contact Author)

University of Sao Paulo ( email )

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

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