Corporate governance, expropriation of minority shareholders’ rights, and performance of Latin American enterprises

Abstract

This study empirically exams whether the internal corporate governance mechanisms of the firms represented in Latin American equity markets lead to the expropriation of minority shareholders’ rights; and whether such expropriation leads to economic underperformance. The data is a sample of 97 companies from Brazil, Chile, and Mexico, for a 3-year period (2000–2002). The results suggest a relationship between the characteristics of a firm’s board of directors and the expropriation of minority shareholders’ rights. Finally, the study provides evidence that expropriation of minority shareholders’ rights may lead to under performance in emerging economies.