Advanced Search
MyIDEAS: Login to save this paper or follow this series

Corporate Governance in Latin America

Contents:

Author Info

  • Alberto E. Chong
  • Florencio López-de-Silanes

Abstract

This paper analyzes recent trends in Latin Americas institutional development regarding to investor protection. In spite of the underdevelopment of the regions financial markets, there is slow movement towards legal reforms intended to protect investors and make regional markets more attractive to investors; current inadequacies in the regions legal institutions generate high levels of ownership concentration, poor access to external equity financing, and narrow equity markets. The evidence in this paper, based on firm-level data for six countries, shows that, like legal protection of investors, appropriate firm-level corporate governance is linked to lower costs for capital, better valuation, performance, and dividend payments across countries. Firms can compensate for their countries legal deficiencies by distinguishing themselves through improved corporate governance practices, thus increasing transparency and limiting potential conflict between large and minority shareholders. Firms can additionally look for capital by issuing ADRs, as they have in recent years, although this practice undermines local capital markets. In the end, firms and regulators must improve their governance structures and shareholder protections if they are to meet the improved benchmarks of developed nations brought about by Asian, European, and U.S. scandals in recent years.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.iadb.org/document.cfm?pubDetail=1&id=1158678
Download Restriction: no

Bibliographic Info

Paper provided by Inter-American Development Bank in its series IDB Publications with number 6723.

as in new window
Length:
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:idb:brikps:6723

Contact details of provider:
Postal: 1300 New York Avenue, NW, Washington, DC 20577
Phone: 202-623-1000
Email:
Web page: http://www.iadb.org/publications/
More information through EDIRC

Related research

Keywords: Financial Sector; WP-591;

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Urbi Garay & Maximiliano González, 2005. "CEO and Director Turnover in Venezuela," Research Department Publications, Inter-American Development Bank, Research Department 3214, Inter-American Development Bank, Research Department.
  2. Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 372, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Reese, William Jr. & Weisbach, Michael S., 2002. "Protection of minority shareholder interests, cross-listings in the United States, and subsequent equity offerings," Journal of Financial Economics, Elsevier, Elsevier, vol. 66(1), pages 65-104, October.
  4. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc.
  5. Stijn Claessens & Joseph P. H. Fan, 2002. "Corporate Governance in Asia: A Survey," International Review of Finance, International Review of Finance Ltd., International Review of Finance Ltd., vol. 3(2), pages 71-103.
  6. Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Legal Determinants of External Finance," Working Paper 19443, Harvard University OpenScholar.
  7. Douglas W. Diamond, 1998. "Reputation Acquisition in Debt Markets," Levine's Working Paper Archive 602, David K. Levine.
  8. Krishna B. Kumar & Raghuram G. Rajan & Luigi Zingales, . "What Determines Firm Size?," CRSP working papers 496, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  9. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages 461-88, June.
  10. James M. Poterba & Mark J. Warshawsky, 1999. "The Costs of Annuitizing Retirement Payouts from Individual Accounts," NBER Working Papers 6918, National Bureau of Economic Research, Inc.
  11. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance And Equity Prices," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(1), pages 107-155, February.
  12. Black, Bernard S. & Jang, Hasung & Kim, Woochan, 2006. "Predicting firms' corporate governance choices: Evidence from Korea," Journal of Corporate Finance, Elsevier, Elsevier, vol. 12(3), pages 660-691, June.
  13. Alexander Dyck & Luigi Zingales, 2004. "Private Benefits of Control: An International Comparison," Journal of Finance, American Finance Association, American Finance Association, vol. 59(2), pages 537-600, 04.
  14. Carlos Pombo & Luis H. Gutiérrez, 2007. "Corporate Governance and Firm Valuation in Colombia," Research Department Publications, Inter-American Development Bank, Research Department 4470, Inter-American Development Bank, Research Department.
  15. Randall Morck & Andrei Shleifer & Robert W. Vishny, 1987. "Characteristics of Hostile and Friendly Takeover Targets," NBER Working Papers 2295, National Bureau of Economic Research, Inc.
  16. Ross Levine & Sergio Schmukler, 2005. "Internationalization and Stock Market Liquidity," NBER Working Papers 11894, National Bureau of Economic Research, Inc.
  17. Jeffrey Wurgler, 1999. "Financial Markets And The Allocation Of Capital," Yale School of Management Working Papers, Yale School of Management ysm123, Yale School of Management, revised 01 Mar 2001.
  18. Hargis, Kent & Ramanlal, Pradipkumar, 1998. "When Does Internationalization Enhance the Development of Domestic Stock Markets?," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 7(3), pages 263-292, July.
  19. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, Elsevier, vol. 3(4), pages 305-360, October.
  20. Fernando Lefort & Eduardo Walker, 2005. "The Effect of Corporate Governance Practices on Company Market Valuation and Payout Policy in Chile," Research Department Publications, Inter-American Development Bank, Research Department 3210, Inter-American Development Bank, Research Department.
  21. Alberto Moel, 2002. "When Are Real Options Exercised? An Empirical Study of Mine Closings," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 15(1), pages 35-64, March.
  22. Sergei Sarkissian, 2004. "The Overseas Listing Decision: New Evidence of Proximity Preference," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 17(3), pages 769-809.
  23. Klapper, Leora F. & Love, Inessa, 2004. "Corporate governance, investor protection, and performance in emerging markets," Journal of Corporate Finance, Elsevier, Elsevier, vol. 10(5), pages 703-728, November.
  24. Rafael La Porta & Florencio López-de-Silanes & Guillermo Zamarripa, 2003. "Related Lending," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(1), pages 231-268, February.
  25. Bernard S. Black & Hasung Jang & Woochan Kim, 2006. "Does Corporate Governance Predict Firms' Market Values? Evidence from Korea," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 22(2), pages 366-413, October.
  26. Claessens, Stijn & Klingebiel, Daniela & Schmukler, Sergio L., 2006. "Stock market development and internationalization: Do economic fundamentals spur both similarly?," Journal of Empirical Finance, Elsevier, Elsevier, vol. 13(3), pages 316-350, June.
  27. Stephen R. Foerster & G. Andrew Karolyi, 1999. "The Effects of Market Segmentation and Investor Recognition on Asset Prices: Evidence from Foreign Stocks Listing in the United States," Journal of Finance, American Finance Association, American Finance Association, vol. 54(3), pages 981-1013, 06.
  28. Juan Cruces & Enrique Kawamura, 2005. "Insider Trading and Corporate Governance in Latin America," Research Department Publications, Inter-American Development Bank, Research Department 3206, Inter-American Development Bank, Research Department.
  29. Daines, Robert, 2001. "Does Delaware law improve firm value?," Journal of Financial Economics, Elsevier, Elsevier, vol. 62(3), pages 525-558, December.
  30. Ricardo N. Bebczuk, 2005. "Corporate Governance and Ownership: Measurement and Impact on Corporate Performance and Dividend Policies in Argentina," Research Department Publications, Inter-American Development Bank, Research Department 3212, Inter-American Development Bank, Research Department.
  31. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(6), pages 1155-77, December.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. González, Maximiliano & Guzmán, Alexander & Pombo, Carlos & Trujillo, María-Andrea, 2012. "Family firms and financial performance: The cost of growing," Emerging Markets Review, Elsevier, Elsevier, vol. 13(4), pages 626-649.
  2. Brau, James C. & Rodríguez, Javier, 2009. "An empirical analysis of Mexican and US closed-end mutual fund IPOs," Research in International Business and Finance, Elsevier, Elsevier, vol. 23(1), pages 1-17, January.
  3. Pombo, Carlos & Gutiérrez, Luis H., 2011. "Outside directors, board interlocks and firm performance: Empirical evidence from Colombian business groups," Journal of Economics and Business, Elsevier, Elsevier, vol. 63(4), pages 251-277, July.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:idb:brikps:6723. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monica Bazan).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.