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Corporate Governance: Challenges For Latin America

Author

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  • FERNANDO LEFORT

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

  • EDUARDO WALKER

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

Abstract

Corporate Governance relates to mechanisms through which providers of resources to the firm get their share of resources in return. Adequate governance practices help develop capital markets and assist market forces in attaining efficient contracts. Convincing evidence exists that well developed capital markets have an important impact on economic performance, growth and productivity. Our motivation for studying the corporate governance challenges faced by Latin America partly arises from a conviction that academic research on these issues can have a direct and substantial positive social impact. In addition, there is much to be learned from the international evidence. The background articles included in the first volume of the special issue cover several subjects including the importance of the law for stakeholder protection in Latin America; the relationship between the development of particular industries and corporate governance systems; international evidence regarding the role of institutional investors in corporate governance; and the influence of external shocks on the way governance systems develop. We conclude that legal reforms may be necessary; that there is no particular governance system that is necessarily the best for all countries and that these systems have to be analyzed in light of each country’s history and development. Also, institutional investors may play an important role in Latin American corporate governance, particularly ADR holders and pension funds. The second volume of the special issue includes five case studies: business groups, property and control structures in Chile, Brazil, Mexico and East Asia. Also, the role of pension funds in Chilean corporate governance is analyzed. We conclude that significant control and ownership concentration exists in all of the cases studied, beyond the minimum needed for control; that the role of banks differs substantially in the different cases; and that group structures are diverse, being notably simpler in Chile. Finally, in this particular article some of the recently proposed legal reforms in Chile are analyzed, especially those related with mandatory tender offer requirements.

Suggested Citation

  • Fernando Lefort & Eduardo Walker, 2000. "Corporate Governance: Challenges For Latin America," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 2(2), pages 99-111.
    • Handle: RePEc:pch:abante:v:2:y:2000:i:2:p:99-111
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    References listed on IDEAS

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    1. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    2. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
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    5. Eduardo Walker & Fernando Lefort, 2002. "Pension Reform And Capital Markets: Are There Any (Hard) Links?," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 5(2), pages 77-149.
    6. Stijn Claessens & Simeon Djankov & Leora Klapper1, 2000. "The Role And Functioning Of Business Groups In East Asia And Chile," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 3(1), pages 91-107.
    7. Fernando Lefort & Eduardo Walker, 2000. "The Effects Of Economic And Political Shocks On Corporate Governance Systems In Chile," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 2(2), pages 183-206.
    8. Gonzalo Castañeda Ramos, 2000. "Governance Of Large Corporations In Mexico And Productivity Implications," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 3(1), pages 57-89.
    9. Laura T. Starks, 2000. "Corporate Governance And Institutional Investors: Implications For Latin America," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 2(2), pages 161-181.
    10. Sílvia Mourthé Valadares & Ricardo Pereira Câmara Leal, 2000. "Ownership And Control Structure Of Brazilian Companies," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 3(1), pages 29-56.
    11. Walker, Eduardo*Lefort, Fernando, 2002. "Pension reform and capital markets : are there any (hard) links?," Policy Research Working Paper Series 24082, The World Bank.
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    2. Fernando Lefort, 2005. "Ownership Structure And Corporate Governance In Latin America," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 8(1), pages 55-84.
    3. Fernando LEFORT & Eduardo WALKER, 2007. "Do Markets Penalize Agency Conflicts Between Controlling And Minority Shareholders? Evidence From Chile," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 283-314, September.
    4. Fernando Lefort & Eduardo Walker, 2000. "The Effects Of Economic And Political Shocks On Corporate Governance Systems In Chile," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 2(2), pages 183-206.
    5. Valentín Azofra Palenzuea & Paolo Saona Hoffmann & Eleuterio Vallelado González, 2004. "Estructura De Propiedad Y Oportunidades De Crecimiento Como Determinantes Del Endeudamiento De Las Empresas Chilenas," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 7(2), pages 105-145.
    6. Christian Espinosa & Carlos Maquieira, 2010. "Productivity: Sensibilidad del Flujo de Caja sobre la Inversión en Sudamérica: Evidencia para Chile," Working Papers 15, Facultad de Economía y Empresa, Universidad Diego Portales.
    7. Fernando Lefort & Eduardo Walker, 2005. "El efecto de las prácticas de gobierno corporativo sobre la valuación de mercado y políticas de pago de compañías chilenas," Research Department Publications 3211, Inter-American Development Bank, Research Department.
    8. Fernando Lefort & Eduardo Walker, 2005. "The Effect of Corporate Governance Practices on Company Market Valuation and Payout Policy in Chile," Research Department Publications 3210, Inter-American Development Bank, Research Department.
    9. Fernando Lefort, 2003. "Gobierno Corporativo: ¿Qué es? y ¿Cómo andamos por casa?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(120), pages 207-237.

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    More about this item

    Keywords

    Corporate governance; Coase; Investor Protection; Regulations; Law Economics; Financial Systems; Corporate Control; Growth; Investment; Business Groups; Institutional Investor; Financial Risk; Ownership Structure; Agency Conflicts; Minority Shareholders; Related Credit; Pension Reform; Emerging Markets; Latin America; Chile; Brazil; Mexico; East Asia;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General

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