The Relationship of Corporate Governance Practices and the Economic-Financial Performance of Companies Traded on the BM&FBOVESPA Stock Market

Corporate governance refers to a set of mechanisms that help shareholders improve their capital returns and the returns on the capital invested and decrease conflicts of interest between managers and shareholders. This study verifies the effect of corporate governance practices on the indicators of market and accounting performance of Brazilian companies traded on the BM&BOVESPA stock market in the period of 2008, 2009 and 2010. For measuring the level of corporate governance, we used an instrument proposed by Carvalhal-da-Silva and Leal (2005). Of the four constructs that make up the instrument, only that of shareholder rights returned a satisfactory Cronbach's Alpha (approximately 0.830). Results indicate no statistically significant effect of the Corporate Governance Index with respect to performance variables. The contribution of this research is to provide evidence that explains possible differences between the findings of national and international studies of the association between governance practices and measures of organizational performance.