The governance of state-owned enterprises must be protected from human conduct that does not serve the best interests of corporations
Corporate directors are hired to manage something that does not belong to them (the shareholders’ assets), therefore occupying a fiduciary position and having a duty of loyalty (duty of loyalty) before the company.
In the specific case of state-owned companies, especially in mixed capital companies, the fiduciary duties of the directors – councilors, administrators and members of the statutory bodies – weigh on the company, regardless of the shareholder who appointed them to the office. In other words, representatives of the State and also of minority shareholders must always act in the best interests of the company which, in some cases, may conflict with that of a particular shareholder.
It turns out that the corporate environment is characterized by so-called agency conflict, in which managers may be incentivized to make decisions aimed at maximizing their own well-being, at the expense of the best interests of society. Note that this scenario is also characterized by the existence of an information asymmetry in which the managers find themselves insiders and have privileged access to information, while others stakeholders NO.
In state-owned companies, potential forms of expropriation are diverse and range from fraud itself to investments in low-profit projects carried out with a purpose other than maximizing long-term company value. This naturally implies a misuse of public money, since the State is the majority shareholder of these companies. Ultimately, therefore, it is the citizens who bear this cost.
In this context, policies and practices related to corporate governance emerge, known as corporate governance (corporate governance). They deal with the structure and decision-making of the company. From an economic perspective, governance is concerned with how providers of venture capital – shareholders and creditors – protect themselves from expropriation by managers and controllers.
In the context of public companies, “bad” governance necessarily implies price discounts and loss of economic value due to the classic relationship between risk and return. This is because economic agents accurately evaluate the risk of expropriation arising from the use of resources by directors in activities that are not in the best interests of the company. In this context, to finance the company they require higher returns, which translate into a higher cost of capital and more restricted access to credit. Numerous national and international surveys show that companies with poor corporate governance practices trade at a “discount” relative to their peers.
It therefore becomes essential to defend the governance practices of Brazilian state-owned companies, also as a way to protect them public res. To achieve this objective it is necessary to establish principles, rules and procedures – accompanied by adequate supervision and monitoring by the competent bodies.
Good governance practices in state-owned enterprises are necessary regardless of the party in power, the dominant economic ideology and/or this or that specific individual. In reality, the idea is precisely this, that is, a “shield”: the government of state-owned companies must be protected from human behavior that does not have the best interests of these companies as their objective.
Fernando Dal-Ri Murcia is a professor in the Department of Accounting and Actuarial Sciences at the University of São Paulo
Source: Terra
Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
