CIPE’s partner the Brazilian Institute of Corporate Governance (IBGC) is studying the 15 most successful corporate governance oriented family-owned firms in Brazil including Weg, an engine manufacturer, Grupo Ultra, a petrochemical company, and Gol, a regional airline. IBGC has been gathering information through interviews with officers in charge of adopting best practices at each company and research of secondary data such as stock market information and public data from the Brazilian Securities and Exchange Commission (CVM).
Initial findings of IBGC’ study show that those companies that incorporate corporate governance practices and principles are more successful than those that do not. After comparing the median results of their sample (15 firms) with the median data of all listed firms in the market (380 firms), IBCG concluded that the family-owned firms are on average, larger, more valuable (by market cap and market multiples), more profitable, with higher dividend payouts, more solvent, and more finance leveraged than the other listed firms in Brazil. Moreover, the firms in IBCG’s sample maintain better governance practices than the average firm in the Brazilian market. This positive correlation between corporate governance practices and firm value has led IBCG to conclude that the adoption of good corporate governance practices is a fundamental step toward business success.
In upcoming months, IBGC will publish a case studies book of 15 successful corporate governance oriented family-owned firms in Brazil. It will be the first study of its kind in Brazil and will serve as a benchmark for other family-owned businesses who seek to improve their corporate governance standards.
Published Date: July 26, 2006