Title: Corporate governance determinants in emerging markets: evidence from Brazil

Authors: Alexandre Leão; Roberto Marcos Da Silva Montezano; Valdir de Jesus Lameira; Marcio Alves Amaral-Baptista; Jean E. Harris

Addresses: Faculdades Ibmec, Av. Presidente Wilson, 118 – 11º, CEP 20030 020, Rio de Janeiro, RJ, Brazil ' Faculdades Ibmec, Av. Presidente Wilson, 118 – 11º, CEP 20030 020, Rio de Janeiro, RJ, Brazil ' INESC Coimbra, Rua Antero de Quental, 199, 3000-033, Coimbra, Portugal ' INDEG-IUL ISCTE Executive Education, Av. Prof. Aníbal Bettencourt 1600 – 189 Lisboa, Portugal ' School of Business Administration, Capital College, The Pennsylvania State University, 777 West Harrisburg Pike, Middletown, Pennsylvania 17057, USA

Abstract: We studied the possible determinants of the adoption of good corporate governance practices by Brazilian firms listed on the São Paulo Stock Exchange between 2003 and 2008, in accordance with Durnev and Kim (2005). Durnev and Kim demonstrated that three firm-level factors may influence the quality of corporate governance practices in countries with low legal protection: growth opportunities, external financing needs and ownership concentration. We operationalised these factors as independent variables that may be related to the quality of corporate governance practices. The firm level of corporate governance was measured by an index comprising a set of good governance prescriptions. We addressed the limitations of endogeneity and reversal causality employing multiple regressions and structural equations modelling. Results revealed that firm-level corporate governance is positively related to growth opportunities and external financing needs, and negatively related to ownership structure confirming the Durnev and Kim's hypotheses.

Keywords: corporate governance; determinants; low legal protection; structural equation modelling; SEM; Brazil; emerging markets; growth opportunities; external finance; ownership concentration; endogeneity; reversal causality; ownership structure.

DOI: 10.1504/IJISE.2016.078902

International Journal of Industrial and Systems Engineering, 2016 Vol.24 No.2, pp.178 - 197

Received: 26 Dec 2014
Accepted: 10 Jan 2015
Published online: 05 Sep 2016 *

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