Ben Ross Schneider, Economic Liberalization and Corporate Governance: The Resilience of Business Groups in Latin America
Despite decades of economic and political liberalization in Latin America, corporate governance among large domestic firms shows remarkable continuity along many dimensions. Most of the largest firms, or business groups, are still widely diversified, closely held, and family controlled. These continuities challenge most theorizing on corporate governance in developed countries and on globalization more generally. A better way to explain stability is to focus on persistent incentives for and advantages of group governance. The core incentives derive largely from endemic volatility and shallow stock markets. Once formed, groups benefit from preferential access to capital, information, and policy. Complementarities among family control, concentrated ownership, and multisectoral diversification further bolster business group resilience.
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