Int. J. of Business Continuity and Risk Management   »   2011 Vol.2, No.3



Title: Governance and risk of Brazilian publicly traded companies


Author: Valdir De Jesus Lameira, Walter Lee Ness Jr., Jean E. Harris, Osvaldo Luiz Goncalves Quelhas, Roberto Guimaraes Pereira


INESC Coimbra, Rua Antero de Quental, 199, 3000-033, Coimbra, Portugal.
Ponthifical University Catholic of Rio de Janeiro, Rua Marques de Sao Vicente, 225 Gavea, Rio de Janeiro – RJ, Brazil.
School of Business Administration, Capital College, The Pennsylvania State University, 777 West Harrisburg Pike, Middletown, Pennsylvania 17057-4898, USA.
MSG/LATEC, Federal Fluminense University, Rua Passo da Patria 156, sala 329-A – Bloco E CEP 24210-240, Niteroi – RJ, Brazil.
TEM/PGMEC/MSG, Federal Fluminense University, Rua Passo da Patria 156, CEP 24210-240, Niteroi – RJ, Brazil


Abstract: This study estimates the relations between the governance practiced by a significant sample of Brazilian publicly listed companies and the risk of them. Local beta, the beta obtained using the S&P 500, share price volatility, idiosyncratic risk and the weighted average cost of capital were used to express their risk. The study confirmed that better governance were associated with lower risk. The structural equations results confirmed the linear regressions results. The endogeneity observed did not invalidate the results. The evidence predominately showed that the direction of causality runs from governance to the risk variables and not vice-versa.


Keywords: business governance; risk management; publicly traded companies; linear regressions; structural equations; Brazil; share price volatility; idiosyncratic risk; capital weighted average cost; risk variables.


DOI: 10.1504/IJBCRM.2011.042302


Int. J. of Business Continuity and Risk Management, 2011 Vol.2, No.3, pp.233 - 261


Available online: 03 Sep 2011



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