A comparative analysis of corporate governance systems in Latin America: Argentina, Brazil, Chile, Colombia, and Venezuela

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This chapter analyzes corporate governance systems in five Latin American countries: Argentina, Brazil, Chile, Colombia, and Venezuela. We account for the broader institutional environment by explaining changes over time as well as existing corporate governance systems. We use a stakeholder definition of corporate governance that includes examining insiders such as owners and boards of directors as well as outsiders such as employees. This corporate governance perspective allows for a systematic cross-national comparison. There exists an extensive literature on the Anglo-American corporate governance system, particularly from the finance field (e.g., Shleifer & Vishny, 1997; Keasey, Thompson, & Wright, 1999) as well as on comparative corporate governance among industrialized countries (e.g., Prowse, 1995; Rhodes & van Apeldoorn, 1998; Weimer & Pape, 1990; AMR special issue on corporate governance, 2003; Grandori, 2004; Gospel & Pendleton, 2005; Aguilera, Filatotchev, Gospel, & Jackson,2008). There have also been some comparative corporate governance studies on eastern Europe (e.g., Federowicz & Aguilera, 2003) and east Asia (e.g., OECD, 2001; Zhuang & Edwards, 2001; Jacoby, 2004). This chapter seeks to fill a gap in comparative corporate governance research by systematically analyzing the main corporate governance characteristics in the five largest countries in Latin America1. Little comparative corporate governance research has been done on this region of the world despite its geographic importance and recent economic interest in creating a Free Trade Area of the Americas. Studies of corporate governance examine how the rights and responsibilities within firms are distributed (Aguilera & Jackson, 2003). The institutions of corporate governance are key factors in the long-term economic development of a country. These institutions have two main objectives: to stimulate the performance of corporations through a business environment that motivates productivity and to ensure corporate conformance between the interests of investors and society (Oman, 2003). Several scholars have discussed the positive relationship between effective national corporate governance systems and firm performance in emerging markets. For example, Klapper and Love (2002) demonstrate that efficient governance is highly correlated with better operating performance and market valuation, and Doidge, Karalyi, and Stulz (2004) show how country characteristics are key explanatory variables in governance ratings across firms in less-developed countries as opposed to firm characteristics in developed countries. This chapter examines the largest and most productive five countries of South America (Argentina, Brazil, Chile, Colombia, and Venezuela). These are developing economies that have in common a tumultuous political and economic history of dictatorships and economic crises. Yet, these countries are in the process of modernizing their corporate governance systems, either as a condition in continuing to receive international aid or simply as a strategy to attract more foreign direct investment. The comparative nature of this chapter allows us to tackle indirectly an important debate within corporate governance, that is, whether there is a convergence toward the Anglo-American model (Hansmann & Kraakman, 2001; Thomsen, 2004). This question has been addressed for transition economies such as Eastern Europe (Aguilera & Dabu, 2005), and more generally emerging markets. For example, an empirical analysis of 24 emerging countries by Khanna, Kogan, and Palepu (2002) indicates that corporate governance convergence is not imminent, although there is as yet no general consensus. Our chapter contributes to this debate by showing that, indeed, there is not full convergence as Latin American countries modernize their corporate governance system. In this chapter, we first review the main political and economic trends of each of the five countries. This might seem unconventional for a study of corporate governance but since these five countries are in emerging markets, we believe it is particularly relevant to stress their broader political and economic conditions that undoubtedly shape their respective corporate governance patterns. Second, we systematically compare different aspects that define the systems of corporate governance in these countries.

Idioma originalAnglès
Títol de la publicacióCorporate Governance in Developing Economies
Subtítol de la publicacióCountry Studies of Africa, Asia and Latin America
EditorSpringer US
Pàgines151-171
Nombre de pàgines21
ISBN (imprès)9780387848327
DOIs
Estat de la publicacióPublicada - 2009
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