Boards of Directors of Publicly‐Held Companies in Brazil: profile and implications for minority shareholders

Saito, Richard; Dutra, Marcos Galileu Lorena

doi:10.1111/j.1467-8683.2006.00490.x

Cited by 11 publications

(5 citation statements)

References 15 publications

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“…When the controlling family is conservative in investment strategies or intends to entrench self‐interests, they will select board members or CEOs who will follow the family's direction. As a result, the selected directors or CEOs may choose venturing projects with low risk or high benefit to family shareholders (Saito & Dutra, 2006; Yeh & Woidtke, 2005).…”

Section: Methodsmentioning

confidence: 99%

Does a Family‐controlled Firm Perform Better in Corporate Venturing?

Wong¹,

Chang²,

Chen³

2010

Corporate Governance

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Manuscript Type: EmpiricalResearch Question/Issue: Family control involves issues of agency costs and nepotism. This study investigated the impacts of family control on stock market reactions to corporate venturing announcements by public firms. Moreover, in this paper we examined whether the monitoring effect of institutional investors influenced the relationship between family control and stock market reactions. Research Findings/Insights: In terms of research findings/results, with different measures of family control, the evidence indicated that family control is significantly and negatively associated with the abnormal returns of corporate venturing announcements. Furthermore, we found that the divergence of cash flow and voting rights had a strong negative impact on abnormal returns. Finally, the empirical results suggested that institutional ownership had a significant positive moderating effect on the relationship of family control and stock market reactions. Theoretical/Academic Implications: Prior research focused on the influence of private family firms on venturing activities. This study contributes to the literature by highlighting the unique characteristics of family control in public firms. This research suggests that nepotism embedded in public family firms is likely to create agency costs resulting from deviations in cash flow and voting rights. This study further shows that institutional ownership plays an important role in reducing agency costs associated with public family firms. Practitioner/Policy Implications: Our findings suggest that family control is an important consideration for investors in evaluating the wealth impacts of corporate venturing. Therefore, a well-established governance system could be a crucial signal of the quality of corporate venturing for family businesses, particularly the outside governance mechanism.

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Section: Methodsmentioning

confidence: 99%

Does a Family‐controlled Firm Perform Better in Corporate Venturing?

Wong¹,

Chang²,

Chen³

2010

Corporate Governance

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“…Because ownership is often largely concentrated, the potential conflicts between majority and minority shareholders are generally more pronounced (e.g., Claessens and Fan, 2002;Claessens and Yurtoglu, 2013;Djankov et al, 2008). For this reason, Saito and Dutra (2006) argue that minority shareholders and the firm itself suffer from a dependency problem between the controlling shareholder and the board of directors. Hence, the structure and composition of board structure in such countries is crucial and there is a need for an appropriate mix (i.e., diversity) of board members combined with other governance mechanisms (e.g., independent directors, presence of block holders, et cetera).…”

Section: Related Literature and Research Focusmentioning

confidence: 99%

Does Diversity of Bank Board Members Affect Performance and Risk? Evidence from an Emerging Market

Setiyono

Tarazi

2018

CSR, Sustainability, Ethics &Amp; Governance

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This study investigates the influence of background diversity of bank board members on performance and risk. Using data from Indonesian banks from 2001 to 2011 covering 4200 individual year observations and 21 ethnic groups, we estimate the degree of diversity by considering various aspects (gender, citizenship, age, experience, tenure, ethnicity, nationality, education level and type) and find significant impacts on bank performance. On the whole, diversity is in general positively associated with performance except when it relates to ethnicity. It not only reduces performance per se but also increases risk. Female presence and professional diversity reduce risk but nationality and ethnicity diversities are associated with higher risk. Education diversity generally leads to higher income volatility and leverage risk. Our results are generally robust to various alternative performance measures, including risk adjusted returns, and estimation methods.

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“…Further, voting shareholders who own 10 percent of the voting share capital, and the group of non‐voting shareholders, may elect one Fiscal Council member each. Previous studies indicate that minority rights have been increasingly employed by smaller shareholders: in 1999, Saito and Dutra () found that the majority of Brazilian minority investors were not using the mechanisms provided by the legislation to elect directors onto boards of directors, while, in 2005, Black et al () found that 41 percent of the 116 Brazilian firms they surveyed had one or more representatives of the minority shareholders.…”

Section: Research Context: Brazil and South Africamentioning

confidence: 99%

Institutional Determinants of Private Shareholder Engagement in Brazil and South Africa: The Role of Regulation

Yamahaki¹,

Frynas²

2016

Corporate Governance

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Manuscript type: Empirical Research Question/Issue: This study investigates to what extent regulation encourages private shareholder engagement attitudes and behavior (including behind-the-scenes consultations, letters, meetings, and ongoing dialogues) of pension funds and asset managers with listed investee companies on environmental, social, and corporate governance (ESG) issues in Brazil and South Africa. Research Findings/Insights: Drawing on 44 in-depth semi-structured interviews with pension fund representatives, asset managers, and other investment players, the findings suggest that legislation provides limited direct encouragement to private engagement behavior. However, legislation encourages attitudes toward Responsible Investment by enhancing investor understanding of Responsible Investment, increasing the interest of pension funds and asset consultants in the Responsible Investment practices of asset managers, and reducing the fear of pension funds to violate their fiduciary duties, thereby promoting an enabling environment for ESG engagement. Theoretical/Academic Implications: This article adds to the literature on comparative corporate governance and shareholder engagement. To the best of our knowledge, this is first study that specifically analyzes how regulation affects private shareholder engagement behavior in emerging markets, providing empirical support for the institutional perspective. The findings also suggest that the sophistication of the legislation on ESG issues in Brazil and South Africa is more typical of developed countries, indicating the need for a more fine-grained analysis of emerging markets in corporate governance studies. Practitioner/Policy Implications: This study draws investors' attention to the importance of understanding the national legal environment of the companies with which they engage and offers insights to governments interested in fostering ESG engagement practices.

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Boards of Directors of Publicly‐Held Companies in Brazil: profile and implications for minority shareholders

Cited by 11 publications

References 15 publications

Does a Family‐controlled Firm Perform Better in Corporate Venturing?

Does a Family‐controlled Firm Perform Better in Corporate Venturing?

Does Diversity of Bank Board Members Affect Performance and Risk? Evidence from an Emerging Market

Institutional Determinants of Private Shareholder Engagement in Brazil and South Africa: The Role of Regulation

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