Recent activism initiatives in Brazil

Abstract

This study offers an overview of shareholder activism in Brazil through the mapping of various types and examples of activism, the construction of an activism index and an analysis relating the activism index to corporate characteristics. Investor engagement and activism may be an important driver of corporate governance improvement (Gillan and Starks in J Appl Finance 13(2):4–22, 2003; Chung and Zhang in J Financ Quant Anal 46(1):247–273, 2011). Activism is more often found in: larger companies; those with many shareholders; with inferior corporate governance practices; and controlled by the state. The study documents the increase in the average activism index during the period, with only eight companies failing to register any type of activism event. However, the items comprising the index did not develop in a homogeneous fashion, with some remaining stable, while others decline. The indicators with the highest rates of growth during the period were: minority presentation of proposals at shareholder meetings; cumulative voting requests to elect directors; and the number of news articles related to the topic. The sample contains 195 companies listed on the Brazilian stock exchange and observed in 2008, 2010 and 2012. The hand-collected data come from minutes of ordinary and extraordinary shareholder meetings, complaints filed with the securities commission and news articles published in a daily business newspaper. The article contributes to the literature on corporate governance in emerging markets and offers a rare view of thousands of shareholder assembly events in one large developing country, being of interest to practitioners and regulators in other emerging economies.