Understanding Board Designs in Latin American Firms: Insights from Brazil

Abstract

[eng] Firms are facing an increasing pressure to conform to a globally-accepted good governance norm that is largely based on developing economies in order to increase board monitoring. However, many Latin American firms deviate from a set of recommended corporate governance practices by adopting board designs with practices associatedwith low board monitoring. We attribute this deviation to the interplay of capacity and willingness to bearthehighcostsofboarddesignswith fewbarrierstoboardmonitoring.Inthisstudy,weuseaconfigurational approach to inductively identify the board designs of publicly listed Brazilian firms. Our findings uncover a typology of boarddesignscorrespondingto particular levels of firmsʼ capacity and willingness to bearthe costsof board governance practices that conform to the good governance norm. We discuss our studyʼs implications for strategic corporate governance.