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The responsibilities of the board: The level of compliance of Latin Americans’ companies to the OECD principles of corporate governance

Accounting in Emerging Economies

ISBN: 978-1-84950-625-0, eISBN: 978-1-84950-626-7

Publication date: 1 December 2009

Abstract

Purpose of article – Board of Directors are characterized as essential elements in the structure of corporate governance. Hence, this study aimed at identifying the governance practices of Latin-American companies in relation to the fifth principle – “Responsibilities of the Board” – recommended by the Organization for Economic Cooperation and Development (OECD) for this region (Brazil, Argentina, Mexico, and Chile).

Design/methodology/approach – To that end, the legislation and corporate practices of companies in the four countries were studied so as to identify legal provisions on the subject and additional procedures adopted by such companies comparatively to OECD recommendations.

Findings – The results showed that Mexico was the country with the highest level of full compliance with OECD recommendations, followed by Argentina, Brazil, and lastly by Chile. They also showed that a lot of improvement still needs to be made so as to ensure the responsibilities of the board in terms of integrity, efficacy remuneration dissemination, and technical competence.

Research limitations/implications – This study was restricted to only four countries in Latin America: Brazil, Argentina, Mexico, and Chile. This procedure is justifiable by the fact that OECD designed its recommendations based on these four countries. It is also important to point out that this study has focused only on Principle V of OECD (2004), concerning the Responsibilities of the Board of Directors.

Originality/Value of article – This study is justified by the need to understand and disseminate Latin-American practices in face of the region-specific governance recommendations designed by OECD, notably on the behavior of the Board of Directors. This region has developing countries with an active stock market. The region presents great potential for economic development, hence the need for these types of studies.

Citation

Henrique Kitagawa, C., de Souza Ribeiro, M. and Carolina Ciampaglia Nardi, P. (2009), "The responsibilities of the board: The level of compliance of Latin Americans’ companies to the OECD principles of corporate governance", Tsamenyi, M. and Uddin, S. (Ed.) Accounting in Emerging Economies (Research in Accounting in Emerging Economies, Vol. 9), Emerald Group Publishing Limited, Leeds, pp. 97-117. https://doi.org/10.1108/S1479-3563(2009)0000009006

Publisher

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Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited