Pragmatic Economics and Sustainable Finance

Building solutions for a better world

Corporate Governance

Corporate Governance is one of my main interests. I enjoy working with companies to improve their governance. My works in the field are related to voluntary corporate governance, derivatives and the evolution of governance in emerging markets. Below are works published in different journals and books.

Firm, market and top management antecedents of speculation: Lessons for corporate governance – Journal of Multinational Financial Management (2015)

In this paper, we explore the corporate governance traits of companies that posted hefty losses related to derivatives trading in the aftermath of the financial crisis. Using concepts from agency theory, cognitive decision making and institutional theory we theorize based on potential facilitators of trading losses. Our sample is comprised of 346 companies from 10 international markets, of which 49 companies (and a subsample of 14 distressed companies) lost an aggregate of US$18.9 billion in derivatives. An event study will show that most companies experience substantial and long-term abnormal returns following these incidents. The end results of the probit model indicate that the lack of formal hedging policy, weak monitoring of the top management, overconfidence in technical trends, hubris and remuneration contribute to the mismanagement of hedging policies. Our overall study contributes to existing financial risk management literature by identifying antecedents of derivatives losses.

Voluntary Corporate Governance with an Empirical Application – Applied Financial Economics (2014)

The main idea of the article is to advance some arguments regarding a paradox of corporate governance: if it creates so much value for shareholders why in most countries governance is still heavily regulated by strict codes? The article advances a theoretical framework for the voluntary adoption of better corporate governance practices as influenced by four dimensions: ownership and control issues, capital structure, exit strategies and market performance.

The Case of Aracruz – Applied Financial Economics (2013)

Aracruz is an interesting case. The largest pulp producer in the world went bankrupt because of speculation with derivatives, which happened because of, among other things, lax corporate governance. In the paper we show how the real hedge position of Aracruz – that lost US$2.1 billion in currency derivatives – deviated from its optimal hedge as the result of speculation with Over-the-Counter (OTC) derivatives.

A Theoretical Framework for Voluntary Corporate Governance – Risk Management and Corporate Governance (2013)

An essay in which I argue for the determinants of voluntary corporate governance. It was published in Risk Management and Corporate Governance, a book edited by Abol Jalilvand and ‎Tassos Malliaris.

Historical Approach to Corporate Governance in Brazil – IUP Journal of Corporate Governance (2012)

We analyze the history of modern Brazilian companies through the ownership and capital structure dimensions, with the goal of justifying the relatively quick process of transition of many Brazilian companies towards a dispersed ownership structure since the 1990s. The paper shows that the relevant features in the historical analysis of the shift towards the relevance of corporate governance in Brazil are: changes in industrialization policies, retained profits and government funding as the major source for investments, and a culture of personalization of the figure of the controller/entrepreneur/founder.

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