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Strengthening Latin American Corporate Governance

The Role of Institutional Investors

image of Strengthening Latin American Corporate Governance

This report reflects long-term, in-depth discussion and debate by participants in the Latin American Roundtable on Corporate Governance. It seeks to encourage the emergence of active and informed owners as an important lever for influencing better corporate governance, adapted to the Latin American context. 

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The Latin American context

market and institutional investor characteristics

Chapter 2 reviews Latin American market and institutional investor (II) characteristics to establish the context for their role in corporate governance. It traces economic and capital market developments in Latin America over the last decade, describing the size, liquidity and growth of Latin America’s largest market economies, and their relatively low levels (with the exception of Brazil) in comparison to more developed OECD countries and many other emerging markets. The chapter also describes the dominant role played by pension funds among IIs in many Latin American countries, and the constraints and incentives they face in investing in listed companies. The chapter then describes specific legal and regulatory approaches taken in different Latin American countries to encourage and enable IIs to responsibly exercise their ownership rights and promote good corporate governance in the companies they invest in, along with market, regulatory and cultural barriers for IIs to play that role.

English

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