Quality of the board of directors in brazilian companies of open capital

Abstract

The Board of Directors is the main body in the corporate governance system which, acting on the continuity of the company, has become a market requirement. The studies that deal with the corporate governance index bring the Board of Directors as an internal body of this index. The study innovates methodologically when constructing the Quality Index of the Board of Directors, elaborating a metric with 40 items according to the IBGC Best Practices of Governance (2015), divided in 4 categories based on the studies of Zahra and Pearce (1990) that define as attributes that affect the performance of the Board of Directors: (i) the structure that defines the organization; (ii) the composition that deals with the size of the board; (iii) characteristics that indicate information about professional experience; (iv) decision-making processes and procedures for monitoring relationships between managers and investors. The sample is composed of 85 internationalized companies, with Brazil headquarter, in a balanced panel, distributed in the period from 2012 to 2016, with information collected in the Reference Forms. The Quality Index of the Board of Directors was internally validated through Cronbach’s alpha by year and category. The results allowed the elaboration of graphs by categories, sectors and items of the index, evidencing the evolution over the years of the Characteristics and Process Categories and the plastering of the categories Structure and Composition. The study ratifies the Board of Directors as the main corporate governance body that deliberates on the company’s continuity and represents a market solution to soften agency problems in organizations.