Corporate Governance in Emerging Markets: What We Can Learn from a Privatisation Context

This chapter analyses the changes observed in the corporate governance of companies after privatisation. Specifically, the study focuses on the analysis of how boards change their two main functions – control and provision of resources – when the company is transferred from public to private hands. This serves as a reference to emerging countries that use privatisation as a mechanism for economic development. Regarding the control function, the study shows the key role played by directors appointed before the Chief Executive Officer (CEO) in monitoring managers. This study also establishes the influence of external factors – such as regulation and competition in the sector – on the control function. Regarding the provision of resource role, the results highlight the importance of changing the configuration of the boards after privatisation – in terms of the profile of the directors – in order to acquire the necessary resources in the private stage of the firm. In this respect, the study indicates that directors who are business experts play a greater role after privatisation, and highlights the important presence of support specialists with specific skills at each stage of the company. The study also emphasises the limitations of some variables traditionally associated with the control function – leadership structure (non-duality) and outside directors – and with the provision of resources role – board size.