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The Corporate Governance of Privately Controlled Brazilian Firms

Author

Listed:
  • Bernard S. Black

    (University of Texas)

  • Antonio Gledson de Carvalho

    (FGV-EAESP)

  • Érica C. R. Gorga

    (FGV-EDESP)

Abstract

We provide an overview of the corporate governance practices of Brazilian public companies, based primarily on an extensive 2005 survey of 116 companies. We focus on the 88 responding Brazilian private firms which are not majority owned by the state or a foreign company. We identify areas where Brazilian corporate governance is relatively strong and weak. Board independence is an area of weakness: The boards of most Brazilian private firms are comprised entirely or almost entirely of insiders or representatives of the controlling family or group. Many firms have zero independent directors. At the same time, minority shareholders have legal rights to representation on the boards of many firms, and this representation is reasonably common. Financial disclosure lags behind world standards. Only a minority of firms provide a statement of cash flows or consolidated financial statements. However, many provide English language financial statements, and an English language version of their website. Audit committees are uncommon, but many Brazilian firms use an alternate approach to ensuring financial statement accuracy – establishing a fiscal board. A minority of firms provide takeout rights to minority shareholders on a sale of control. Controlling shareholders often use shareholders agreements to ensure control.

Suggested Citation

  • Bernard S. Black & Antonio Gledson de Carvalho & Érica C. R. Gorga, 2009. "The Corporate Governance of Privately Controlled Brazilian Firms," Brazilian Review of Finance, Brazilian Society of Finance, vol. 7(4), pages 385-428.
    • Handle: RePEc:brf:journl:v:7:y:2009:i:4:p:385-428
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    Cited by:

    1. Black, Bernard S. & de Carvalho, Antonio Gledson & Gorga, Érica, 2010. "Corporate governance in Brazil," Emerging Markets Review, Elsevier, vol. 11(1), pages 21-38, March.
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    4. Black, Bernard S. & de Carvalho, Antonio Gledson & Gorga, Érica, 2012. "What matters and for which firms for corporate governance in emerging markets? Evidence from Brazil (and other BRIK countries)," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 934-952.
    5. Gama, Marina Amado Bahia & Bandeira-de-Mello, Rodrigo, 2021. "The effect of affiliation structure on the performance of pyramidal business groups," Journal of Business Research, Elsevier, vol. 124(C), pages 24-37.

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    More about this item

    Keywords

    Brazil; corporate governance; boards of directors; minority shareholders.;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K29 - Law and Economics - - Regulation and Business Law - - - Other

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