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Corporate Governance in Brazilian Companies: The Influence of the Founder in the Financial Decisions

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Book cover Dimensional Corporate Governance

Part of the book series: CSR, Sustainability, Ethics & Governance ((CSEG))

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Abstract

All over the world, corporate governance is adopting a new process of leadership and simultaneously propagating responsible governance for the welfare of stakeholders. This research has allowed us to identify new directions for future research. It examines the influence of several contextual factors in the framework of the financial decisions, where company has the right to have a transparent accountability, based on the influence of the founder, dispersion and type of ownership, size, economic sector and environment.

The aim of this research is to analyse the influence of the founder in the financial decisions based on the comparability of the level of indebtedness among Brazilian companies managed by its founder and those managed by professionals.

The methodology focuses the theoretical analysis on the literature review about Corporate Governance and Corporate Finance. The empirical analysis is based on econometric analysis supported on the multiple regression model and fixed effects method. The sample includes 356 non-financial Brazilian companies, with accounting data from the period 2004–2009, on a total of 2136 observations.

The results find supporting evidence that lower debt in those companies of the sample in which the founder is the manager of the company and, in contrast, bigger indebted level of the professional manager. Further findings confirm a reduction of the investment level in businesses run by its founder, as well as, their preference for using equity. The founder has quite peculiar biases relation with decision making process. Generally, the founder has a personal need and his or her own interest, is based on the entrepreneurship decisions.

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Acknowledgement

The authors wish to thank José Ángel Pérez López of Universidad de Seville (Spain), David Crowther (UK) and anonymous referee for improvements on the research from the International CSR, Sustainability, Ethics & Governance Conference of the Global Corporate Governance Institute. Current version is a publication supported by the Project PEst-OE/EGE/UI4056/2014 UDI/IPG, finance by the Fundação para a Ciência e Tecnologia. The authors belong to the Centro de Investigação de Contabilidade e Fiscalidade. We thank MackPesquisa CI. FMP. 192/2013 from Universidade Presbiteriana Mackenzie for supporting this research.

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Authors and Affiliations

  1. Mackenzie Presbyterian University, Sao Paulo, Brazil

    Liliane Segura & Henrique Formigoni

  2. Guarda Polytechnic Institute & UDI-IPG & CICF-IPCA, Guarda, Portugal

    Rute Abreu & Fátima David

Authors
  1. Liliane Segura
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  2. Henrique Formigoni
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  3. Rute Abreu
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  4. Fátima David
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Correspondence to Rute Abreu .

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Editors and Affiliations

  1. College of Business, Loyola University New Orleans, New Orleans, Louisiana, USA

    Nicholas Capaldi

  2. Guildhall Faculty of Business and Law, London Metropolitan University, London, United Kingdom

    Samuel O. Idowu

  3. Cologne Business School, Cologne, Germany

    René Schmidpeter

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Segura, L., Formigoni, H., Abreu, R., David, F. (2017). Corporate Governance in Brazilian Companies: The Influence of the Founder in the Financial Decisions. In: Capaldi, N., Idowu, S., Schmidpeter, R. (eds) Dimensional Corporate Governance. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-56182-0_8

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