Corporate governance and ownership structure of Mexican companies
The academic literature on corporate governance is extensive and it covers diverse economies and situations. However, little is known about the mechanisms that discipline corporate governance and control in Mexican corporations. This document makes an examination through a description of these mechanisms using three different approaches: the economic history of Mexican financial markets, the legal system in Mexico, and an empirical analysis of corporate governance characteristics of Mexican corporations. The empirical analysis was made using information from non-financial Mexican corporations with shares listed in the Mexican Stock Exchange (BMV) during the years 1996, 2000, and 2006. The results of this study indicate that companies currently traded in Mexican markets are 50 years old, on average, and these companies waited 30 years to go public. The economic environment in Mexico suffered from drastic changes and the companies implemented diverse mechanisms to protect their property from external threats including nationalization processes and foreign investor takeovers. The legal system in Mexico is based on the Napoleonic code. However, the regulations applied to corporations are very similar to those that exist in the American economy. The empirical results of this study indicate that the companies that held large amounts of assets and had American Depositary Receipts in the American markets presented outstanding financial performance and the activity of the boards of these companies was intense. During the years studied, most of the companies in Mexico were family owned business and, on average, almost three family members controlled the voting shares of the entire company. The size of the board of directors and the percentage of independent directors did not represent a significant difference among the companies studied. These results support the argument that companies with cross-listings present better financial performance as a result of the law enforcement that is present in developed markets. The argument that the boards of directors collect information from other boards is supported, also.