CORPORATE GOVERNANCE IN BRAZIL: CONTRAST BETWEEN FINANCIAL INSTITUTIONS AND NON-FINANCIAL INSTITUTIONS’ PRACTICES

Abstract

Studies such as those conducted by Adams and Mehran (2003), Macey and O’Hara (2003), Leeladhar (2004) and Levine (2004) point out that financial institutions have different characteristics than the institutions of other sectors of the economy. Given this finding, this article aims to analyze whether there are differences in corporate governance practices between financial institutions and non-financial institutions in Brazil. To achieve this goal, two samples were selected, one composed of the 15 largest banks that present corporate governance information on their websites and the other formed by 15 non-financial companies that are in the Level 2 of Corporate Governance of BM&FBOVESPA. Using the same variables from the study done by Adams and Mehran (2003) which, according to the results of research done by several scholars of the subject, represent more faithfully the main corporate governance practices. These variables relate primarily to the internal structures of governance and to the block ownership of the shareholders. For purposes of this study, two other variables identified as relevant by major international codes of corporate governance were added: (i) the existence of an Audit Committee and (ii) the office term of the Board of Directors’ members. The research result obtained by means of statistical tests for mean differences revealed that, statistically, it can be inferred that that are no significant differences in most corporate governance practices adopted by financial institutions and non-financial institutions in Brazil, except for Audit Committee and Mandate Term variables.