INTERNATIONALIZATION AND GOVERNANCE IN MAJOR BRAZILIAN PUBLIC COMPANIES

This study examines the extent to which the internationalization of 100 major public companies in Brazil affects the quality of their corporate governance mechanisms. Internationalization is approached with a bi-dimensional point of view over capital and activities. Degrees of internationalization of activities and of capital were calculated by the arithmetic average of indicators already related in the literature. Quality of governance was obtained by means of an index made up of 19 items that deal with Information Content and Access, Agents of corporative governance, and Property and control structure, which are widespread aspects in empirical studies on the theme. Data were collected from the reference forms and annual reports of 2011. The content analysis was employed. For the testing hypotheses, estimation techniques of correlation and regression analysis were used. Results evidenced that the internationalization of activities positively influences the quality of governance, and proportion of foreign income is the indicator which contributes the most to this relation. On the other hand, capital internationalization did not present direct relation with the index of corporate governance quality, although it presents associations with different aspects of governance. This study helps understand the relationship between internationalization and governance in the Brazilian capital market, which would lead one to suggest that Brazilian companies operating in foreign markets tend to adopt better governance practices, especially concerning disclosure, in order to reduce the transaction costs associated to internationalization, which results in increased trust by foreign stakeholders.