Aligning corporate governance private regulation with the public interest: a look at the pitfalls of the Brazilian takeover private regulation

Abstract

The recognition of corporate governance as a consequential aspect for adequate investor protection and the development of both capital markets and the economy as a whole, the fundamental differences between governance arrangements that seem useful to controlled and widely held companies, and how to deal with such matters in view of the increasing use of private regulatory measures firm the cornerstone of this article. This article draws on an example of the private regulation of takeovers in Brazil and argues that regulation of the capital market, be its origin public or private, must pay attention to the corporate ownership structures that dominate the jurisdiction in which the rules are to be applied. The alignment of corporate governance private regulatory measures with the public interest is argued to be fostered once one duly considers that corporate governance arrangements work differently in environments of concentrated or dispersed ownership structures.