Determinants of corporate governance practices in Brazil

We study the determinants of Corporate Governance (CG) practices in Brazil. Using hand collected data, we build CG subindices for Board Structure, Board Procedures, Minority Shareholders Rights, and Disclosure, and an overall CG index, BCGI, computed as the average of these four subindices. During our sample period, CG practices changed significantly: improvement was stronger among firms in the High- than Low-CG requirement listings. Tangibility and Liquidity are the only variables that predict CG practices with some consistency. Most importantly, we find no evidence that Tobin's q predicts CG practices. This last result lowers the possibility of reverse causation in analyses that use CG practices as determinant of firm value.