Facing the Regulators: Noncompliance With Detailed Mandatory Compensation Disclosure in Brazil

Lucas Ayres B. de C. Barros, Alexandre Di Miceli da Silveira, Patricia M. Bortolon and Ricardo P. C. Leal

Emerging Markets Finance and Trade, 2015, vol. 51, issue S2, S47-S61

Abstract: A preliminary court injunction based on alleged personal security risks gave Brazilian public companies the option of noncompliance with new executive and director compensation disclosure rules. We find that noncompliance is possibly motivated by agency conflicts and not by crime rates in the state where the company is headquartered. Noncompliers tend to present lower corporate governance (CG) quality, higher ownership concentration, larger total assets, and less profitability. State- and foreign-owned companies are significantly less likely noncompliers. Shareholders correctly anticipated that lower CG quality firms were more likely noncompliers but may have been negatively surprised when some higher CG quality firms did not comply.

Date: 2015
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DOI: 10.1080/1540496X.2014.998942

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