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Ownership Structure And Corporate Governance In Latin America

Author

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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.

Suggested Citation

  • 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.
  • Handle: RePEc:pch:abante:v:8:y:2005:i:1:p:55-84
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    File URL: http://eacc10.puc.cl/files/ABT/Contenidos/Vol-8-N1/Lefort.pdf
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    References listed on IDEAS

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    9. 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.
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    11. repec:hrv:faseco:30747162 is not listed on IDEAS
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    15. 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.
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    Cited by:

    1. 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.
    2. 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.
    3. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
    4. Liangliang Jiang & Yi Zhu, 2014. "Effects of Foreign Institutional Ownership on Foreign Bank Lending: Some Evidence for Emerging Markets," International Review of Finance, International Review of Finance Ltd., vol. 14(2), pages 263-293, June.
    5. Urzúa Infante, F., 2014. "Essays on ownership and control," Other publications TiSEM f17a9a42-f7a7-4ffa-a95d-a, Tilburg University, School of Economics and Management.

    More about this item

    Keywords

    Corporate governance; Ownership structure; Latin America; Chile;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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