Limitations of Legal Transplants and Convergence to Corporate Governance Practices in Emerging Markets: The Brazilian Case

Angela Donaggio ()
Additional contact information
Angela Donaggio: Sao Paulo Law School (DIREITO GV) and University of Sao Paulo (USP)

A chapter in Corporate Governance in Emerging Markets, 2014, pp 465-484 from Springer

Abstract: Abstract Little is known about the outcomes of legal transplants carried out by emerging economies aiming to develop their securities markets. This chapter contributes to fill this gap by analyzing the effectiveness of investor protection rules of the Novo Mercado, a self-regulatory transplant created in 2000 in Brazil to distinguish companies committed to higher governance standards. Employing the institutional autopsy approach through an in-depth qualitative analysis of two controversial cases, I conclude that the legal transplantation generated mixed results. On the one hand, Brazil greatly developed its capital markets after the Novo Mercado’s creation. On the other hand, the Novo Mercado did not work as expected regarding investor protection due to deficient enforcement and rule’s interpretation. I argue that these problems may derive from conflicts of interests of the stock exchange, the formalistic interpretation of rules and a lack of adequate oversight structure. The Brazilian case demonstrates that cultural, political, economic, and institutional elements permeate entire markets and that the transplant did not alter the main agency problem between controlling and minority shareholders that still characterizes Brazilian companies, even those listed on the Novo Mercado. I believe that this result should be considered for any legal transplantation.

Keywords: Corporate Governance; Stock Exchange; Minority Shareholder; Investor Protection; Corporate Governance Practice (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:csrchp:978-3-642-44955-0_19

Ordering information: This item can be ordered from
http://www.springer.com/9783642449550

DOI: 10.1007/978-3-642-44955-0_19

Access Statistics for this chapter

More chapters in CSR, Sustainability, Ethics & Governance from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().