11 - Conclusion

Summary

This book is a detailed historical account of how Brazil's institutions of corporate governance and practices of corporate finance have changed over time. It is a study of the contingent factors that led to changes in how companies interacted with investors and how those changes, in turn, shaped the financial structure of companies (the choice of debt vs. equity). In short, it is a history of change.

This historical analysis yields three major conclusions. First, companies are not bound by the legal environment in which they operate. Companies can shape and change corporate governance practices by devising bylaws that attract outside investors to buy the equity and bonds they issue. Second, firms' financial structures respond to changes in the institutions and practices of corporate governance, driven, in some instances, by macroeconomic shocks. Third, the fact that corporate governance and finance changed so much over time implies that there has been little persistence of legal institutions in Brazil in the last two hundred years.

COMPANIES ARE NOT BOUND BY THE LEGAL ENVIRONMENT IN WHICH THEY OPERATE

This book shows that in the absence of investor protections embodied in national laws and monitoring by specialized agencies corporations can themselves provide the needed protections, perhaps even more effectively, in their bylaws. Today there is a prevailing belief that the best way to “democratize” the control of corporations is to require at the national level that companies include one-share, one-vote provisions in their statutes. This is a requirement to be traded on Bovespa's New Market with the highest level of corporate governance standards today.