Corporate governance and firm performance in Latin America: a meta-analysis

Abstract

Purpose The relationship between the role played by corporate governance (CG) mechanisms and shareholder wealth is an important and mature topic in some countries and regions. However, despite the considerable number of studies, the results are still inconclusive. The purpose of this paper is to contribute to the debate around the theme in Latin America through a meta-analysis. Design/methodology/approach The study used meta-analytic procedures to review 42 articles produced by researchers from Latin American countries, whose samples were composed of Latin American firms. Findings The results suggest that CG best practices are associated with better Latin American firm performance. The evidence also suggests that results are moderated by the characteristics of boards of directors, the ownership, and control structure and various simultaneous CG mechanisms, through broad indices and special CG trading segments. Originality/Value The relationship between GC and firm performance possesses certain peculiarities in the case of Latin American countries and the literature on the region is certainly not as abundant and mature. As most of the articles reviewed were written in Portuguese and Spanish and published in local journals, the consolidation produced should also be useful for researchers throughout the world by enabling them to access their ideas.

Shareholder activism impact on efficiency in Brazil

“…While research about shareholder activism is quite common in the USA and Europe, in Latin America and particularly Brazil, there has been very little research conducted in this area (Cris ostomo and Gonzá lez, 2006). A recent meta-analysis of articles dealing with CG and performance in Latin America did not include a single article about activism (Maranho and Leal, 2018). The reason for this may be the high ownership concentration that possibly hinders shareholder activism (Judge et al, 2010;Punsuvo et al, 2007;Shleifer and Vishny, 1997).…”

Níveis diferenciados de governança corporativa e a probabilidade de violação dos covenants financeiros

“…Além disso, a adoção das boas práticas de governança corporativa influencia na elevação e qualidade dos lucros, na redução do nível de gerenciamento de resultados, na redução do endividamento bancário e no custo de financiamento das dívidas, passando as companhias a utilizarem mais dívidas de curto prazo do que dívidas de longo prazo. Sendo a dívida de curto prazo, portanto, um disciplinador para os gestores na tomada de decisão (Silva et al, 2011;González & García-Meca, 2014;Maranho & Leal, 2018;Nisiyama & Nakamura, 2018). Palhares et al (2019) identificaram que o tamanho do conselho administrativo e a concentração de propriedade são fatores fundamentais na quantidade de covenants financeiros a serem inseridos nos contratos de dívida.…”

Principal-principal conflicts leading to activism of a large government-owned investor in Brazil

“…Alternatively, selling and walking away, or exit, may be the most common reaction (Gillan & Starks, 2007). The antecedents of principal-principal conflicts are evident in Brazil, such as family ownership, high ownership concentration, less effective minority shareholder protection, low quality of corporate governance (CG) practices ratings, and majority shareholder abuse (de Almeida & Leal, 2020; Maranho & Leal, 2018;Carvalho, 2014 Activist shareholder campaigns may be a way to promote better CG practices, improve performance and protect minority shareholders from the agency and principal-principal conflicts and abuse (Young et al, 2008;Gillan & Starks, 2007). Institutional investors could have an incentive to monitor investee companies because, in general, they have greater equity ownership in companies than individual investors, can capture gains that may exceed the costs of engagement, and be more likely to succeed than other investors (Shleifer & Vishny, 1997).…”

“…Goranova and Ryan (2014), Judge, Gaur, and Muller-Kahle (2010), and Young et al (2008), in particular, will be used as a conceptual basis because they offer or review models with the background, actions, and expected results of principal-principal conflicts of interest and activist actions. The cases contribute to the scarce literature involving the activism of institutional investors in emerging markets, and in Latin America in particular (Maranho & Leal, 2018).…”