Do internationalized companies have better governance? Lessons from Brazil

Multinational enterprises (MNEs) have grown and expanded their presence significantly in recent years. Governing MNEs' activities in different countries is complex and demand efficient governance arrangements. Although there is an extensive literature on both MNEs and corporate governance, the...

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Bibliographic Details
Published in:Applied financial economics 2014-05, Vol.24 (10), p.679-690
Main Author: Carvalhal, Andre
Format: Article
Language:English
Subjects:
Brazil
Corporate governance
Demand
Disclosure
Globalization
Literature
Management theory
Multinational corporations
Multinational enterprises
multinational enterprises (MNEs)
Ownership
Shareholders rights
Stockholders
Studies
Citations: Items that this one cites
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Summary:Multinational enterprises (MNEs) have grown and expanded their presence significantly in recent years. Governing MNEs' activities in different countries is complex and demand efficient governance arrangements. Although there is an extensive literature on both MNEs and corporate governance, the relationship between MNEs and governance remains largely unexplored. This article analyses multiple aspects of governance of MNEs by using broad firm-level governance indices. We use comprehensive Brazilian data and find that MNEs have better governance in Brazil. Overall, MNEs have better disclosure, board and shareholder practices. We also report that ownership and control are less concentrated in MNEs than in local firms, and that the governance of MNEs is positively (negatively) associated with cash flow (voting) rights held by large shareholders. The results are robust to alternate measures of governance and to controlling for endogeneity and self-selection.
ISSN:0960-3107
1466-4305
DOI:10.1080/09603107.2014.899667