Recent activism initiatives in Brazil

Abstract

This study offers an overview of shareholder activism in Brazil through the mapping of various types and examples of activism, the construction of an activism index and an analysis relating the activism index to corporate characteristics. The sample contains 195 companies listed on the Brazilian stock exchange and observed in 2008, 2010 and 2012. The data sources are the minutes of ordinary and extraordinary shareholder meetings, complaints filed with the securities commission and news articles published in a daily business newspaper. The study documents the increase in the average activism index during the period, with only eight companies failing to register any type of activism event. However, the items comprising the index did not develop in a homogeneous fashion, with some remaining stable while others decline. The indicators with the highest rates of growth during the period were: minority presentation of proposals at shareholder meetings; cumulative voting requests to elect directors; and the number of news articles related to the topic. Non-inferential analyses document that evidence of activism is more often found in: larger companies; those with many shareholders; with inferior corporate governance practices; and controlled by the state.

Governança Corporativa: Fator Preponderante no Ativismo de Acionistas no Brasil

“…A few studies broadened the analysis of shareholder activism in the Brazilian market, among which we highlight those by Almeida (2017) regarding the performance of institutional investors in the face of expropriation risks and Vargas (2013), Vargas, Bortolon, Barros, and Leal (2017), and Collares (2018), who produced a shareholder activism index. Guimarães, Leal, Wanke, and Morey (2019), in turn, use this evidence of shareholder activism to verify its impact on the efficiency of the target companies and find a negative relationship between these variables.…”

“…The activism categories that make up the index are theoretically based on the academic literature on the topic (Gillan & Starks, 1998;Goranova & Ryan, 2014;McCahery et al, 2015;Vargas et al, 2017), by the relevant legislation to corporations (Law No. 6,385, 1976;Law No.…”

“…Companies with poor governance quality motivate shareholder activism actions (Gillan & Starks, 2003;Vargas et al, 2017).…”

“…Ratio between total liabilities and total assets. Gillan and Starks (2003) and Vargas et al (2017) suggest that there is a possible replacement of shareholder monitoring actions by companies' creditors.…”

“…Previous studies such as those by Gillan and Starks (2003; argue the improvement of CG mechanisms by the action of activist shareholders, just as McNulty and Nordberg (2016) understand that the active investor will produce the same effect. On the other hand, some studies show results sometimes with a weak relationship between such factors (Elst, 2012), sometimes in the opposite direction (Punsuvo, Kayo, & Barros, 2007;Vargas, Bortolon, Barros, & Leal, 2017).…”