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Ownership Structure And Corporate Governance In Latin America

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  • FERNANDO LEFORT

    ()
    (Escuela de Administración, Pontificia Universidad Católica de Chile)

Abstract

This paper provides an overview of corporate governance practices in Latin American countries, surveying the available empirical literature, reviewing the reports on the subject prepared by multinational organizations, and providing new data for ownership and control structures of companies in different Latin American economies. Like in other emerging economies corporate governance in Latin America is conditioned by the high level of ownership concentration and the profusion of industrial and financial conglomerates controlling several companies. This corporate structure generates an agency problem between controlling and minority shareholders, that is exacerbated when controlling shareholders hold a disproportionate amount of voting power in relation to their cash flow rights. New empirical evidence indicates that Latin American markets penalize excessive separation between control and cash flow rights held by controlling shareholders. In addition, legislation, regulations and the judiciary power in the region are less effective in promoting and enforcing good practices than in more developed markets. Legal reform has been recently introduced to improve minority shareholder protection and enforcement.

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Bibliographic Info

Article provided by Escuela de Administracion. Pontificia Universidad Católica de Chile. in its journal ABANTE.

Volume (Year): 8 (2005)
Issue (Month): 1 ()
Pages: 55-84

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Handle: RePEc:pch:abante:v:8:y:2005:i:1:p:55-84

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Web page: http://eacc10.puc.cl/RePEc/pch/
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Keywords: Corporate governance; Ownership structure; Latin America; Chile;

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References

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  1. Manuel R. Agosin & Ernesto Pastén H., 2003. "Corporate Governance in Chile," Working Papers Central Bank of Chile 209, Central Bank of Chile.
  2. Klapper, Leora F. & Love, Inessa, 2002. "Corporate governance, investor protection, and performance in emerging markets," Policy Research Working Paper Series 2818, The World Bank.
  3. Walker, Eduardo & Lefort, Fernando, 2002. "Pension reform and capital markets : are there any (hard) links?," Social Protection Discussion Papers 24082, The World Bank.
  4. Luis H Gutiérrez & Carlos Pombo, 2005. "Corporate Valuation and Governance: Evidence from Colombia," BORRADORES DE INVESTIGACIÓN 002203, UNIVERSIDAD DEL ROSARIO.
  5. Carlos Pombo & Luis H Gutierrez & Rodrigo Taborda, 2005. "Ownership and Control in Colombian Corporations," BORRADORES DE INVESTIGACIÓN 003311, UNIVERSIDAD DEL ROSARIO.
  6. Pablo Morán V, 2003. "Looking Back At The Controversy: Unexpected Wealth Effects Of A Transitory Clause," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 6(2), pages 117-147.
  7. Tarun Khanna & Krishna Palepu, 2000. "Is Group Affiliation Profitable in Emerging Markets? An Analysis of Diversified Indian Business Groups," Journal of Finance, American Finance Association, vol. 55(2), pages 867-891, 04.
  8. René M. Stulz, 2005. "The Limits of Financial Globalization," Journal of Finance, American Finance Association, vol. 60(4), pages 1595-1638, 08.
  9. 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.
  10. Urbi Garay & Maximiliano González, 2005. "CEO and Director Turnover in Venezuela," Research Department Publications 3214, Inter-American Development Bank, Research Department.
  11. Vives,Xavier (ed.), 2000. "Corporate Governance," Cambridge Books, Cambridge University Press, number 9780521781640.
  12. Juan Cruces & Enrique Kawamura, 2005. "Insider Trading and Corporate Governance in Latin America," Research Department Publications 3206, Inter-American Development Bank, Research Department.
  13. 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.
  14. Ricardo N. Bebczuk, 2005. "Corporate Governance and Ownership: Measurement and Impact on Corporate Performance and Dividend Policies in Argentina," Research Department Publications 3212, Inter-American Development Bank, Research Department.
  15. 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.
  16. Fernando Lefort & Eduardo Walker, 2000. "Ownership And Capital Structure Of Chilean Conglomerates:Facts And Hypotheses For Governance," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 3(1), pages 3-27.
  17. 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.
  18. 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.
  19. 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.
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Cited by:
  1. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
  2. Jesus Sáenz González & Emma García-Meca, 2014. "Does Corporate Governance Influence Earnings Management in Latin American Markets?," Journal of Business Ethics, Springer, vol. 121(3), pages 419-440, May.
  3. Mario García Molina, 2010. "Crisis Y Diversificación De Los Grupos Empresariales Colombianos A Finales De Los Noventa," DOCUMENTOS DE TRABAJO - ESCUELA DE ECONOMÍA 007571, UN - RCE - CID.

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