Full paper EGOS 2013 Montreal Sub-theme 11: (SWG) Multinationals, Social Agency and Institutional Change: Variation by Sector

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1 Full paper EGOS 2013 Montreal Sub-theme 11: (SWG) Multinationals, Social Agency and Institutional Change: Variation by Sector 1) Nelson A.Thomaz (MSc Student and MBA in finance), main author, Universidade Municipal de São Caetano do Sul (USCS), 2) Edson Keyso de Miranda Kubo (Phd), coauthor, Universidade Municipal de São Caetano do Sul (USCS) /Universidade Cruzeiro do Sul (UCS), 3) Laercio Baptista da Silva (Phd), coauthor, Universidade Municipal de São Caetano do Sul (USCS), Reflections on corporate governance configuration in Brazilian multinational companies Abstract Internationalization of Brazilian enterprises and adoption of corporate governance show no trend of slowing down even under the context of international crises. However there are almost no researches on the association of these two topics concerning Brazilian context in international literature. The aim of this article is to analyze how corporate governance is spreading and contributing to the internationalization of Brazilian enterprises. Since this is a totally unexplored field, we performed an exploratory study based on official secondary data basis concerning Brazilian Transnational companies and the Brazilian Stock Market represented by Brazilian future market and Stock Market in Sao Paulo (BM&F BOVESPA). The findings show that Brazilian Multinational Companies do not seem to be particular about corporate governance and that corporate governance does not seem to be essential for their internationalization. Among the 10 Brazilian companies with the highest Transnationality index, half of them do not even appear in the list of BM&F BOVESPA, which suggests a lack of emphasis on corporate governance practices and a strong resistance to dilute ownership control.

2 Keywords: Internationalization, Corporate Governance, Brazilian Multinational Companies, Ownership control. Introduction Under the context of globalization, internationalization of enterprises shows no sign of slowing down. Historically, since the 50s and due to the development policies of the former President Juscelino Kubitschek, Brazil has received a great number of multinational companies (MNC) that brought technology, management systems and also contributed to the creation of a national industrial park. Brazil has received a hitherto great amount of foreign direct investment. In 2010 for example, Brazil received around 40U$ billion in foreign direct investment (FDC, 2011). This process has continued in several sectors, however, from the 70s, especially in 1990 and 2000 (FDC, 2012) there was a noticeable change in this pattern since Brazilian companies started to make also foreign direct investments (FDI) in Latin America, and, then in North America and around the world. Ricupero and Barreto (2007) mentioned that Brazilian foreign direct investments on abroad between 1995/96 reached around U$ 1.3 billion, U$ 3 billion in 1998, and U $ S 9,5 billion in In 2011, the Brazilian FDI reached around 15 billion U$. The internationalization process requires adapting to new cultures, different customer needs, new rules and different expectations (JOHANSON; VAHLNE, 2006). Moreover aspects of management, accountability, presentation and transparency of information in many cases lead these companies to fit themselves to international institutions in order to fulfill the expectations of the market and their shareholders. This is the so called process of Corporate Governance (CG), a subject that in the past twenty years have been treated more emphatic either by Shareholders or by the Stakeholders. However little is known about how corporate governance is spreading and cooperating to the internationalization of Brazilian enterprises. This article intends to answer the following question: How corporate governance is contributing to the internationalization of Brazilian enterprises? Corporate governance in Brazilian context

3 Corporation, as a group of people with similar interests who unite and invest their capital in a common business, arouse the well known conflict between agent and principals (BERLE; MEANS, 1932; LA PORTA et al., 1997; DOWELL; SHACKELL; STUART, 2011.). Under this type of organization, ownership control is scattered and the agent must behave and defend the interests of the principal (owners) who are the stockholders for example. With the creation of this type of organization, it inherently emphasized the need for information transparency regarding the controls of "investments", of "expenses," "income" and, therefore, the final results of projects. These events have enlightened the non-conformities found out in business management contexts, where managers interests overlap with the interests of shareholders. According to Rossetti and Andrade (2011) this phenomenon is becoming more evident due to some events that over time tended to influence the decision making process of companies such as the organization enlargement, the process of dilution of capital and therefore control over organizations, the "divorce" between ownership and management, increased costs and conflicts in the face of dilution of control and the rise of managers rather than owners. These events served to open up possibilities for change, especially in terms of management responsibility versus desired results by both the Shareholders and Stakeholders. According to Monks and Minow (2004) corporate governance approaches the conflicts and costs of this new order, proposing that shareholders of large companies begin to interfere more in their management, providing advice guardians to represent their interests through the following values (IBGC, 2004): i. Transparency of Information (Disclosure); ii. Provision of Accounts Officer (Accountability); iii. Conformity Compliance with Regulatory Standards (Compliance); iv. Sense of Justice in the Treatment of Shareholders Equity (Fairness). The following table shows the main events concerning the evolution of corporate governance in Brazil: Figure 1: Evolution of Corporate governance (CG) in Brazil since the 50s.

4 Period: Historical data: 1950s and Presence of family majority shareholder; councilors without working 1960s experiences and with little knowledge about the activities of the managing shareholder. 1970s Foundation of the U.S. NACD (National Association of Corporate Directors); creation of the Committee on Banking Supervision Basileia; In Brazil, the institution of Law 64.04/76 giving powers to the board and creating the CVM (Brazilian Securities Commission), Law 6385/76; emergence of great Brazilian Boards; 1980s Appreciation of the shareholder; public offering by firms, creation of COSO "Committee of Sponsoring Organizations of the Tread way Commission." (USA) 1990s Greatest strength of the boards and definition of the role of audit; Privatisation, globalization, mergers and acquisitions; Historically, the term corporate governance was first used by Robert Monks; Cadbury Report (England); publication of the corporate governance guidelines of General Motors; creation of the IBCA (Brazilian Institute of Board of Directors), today IBGC (Brazilian Institute of Corporate Governance); publication of the best Practices of NACD report; OECD (Organization for Economic Cooperation and Development) prepares the Principles of Corporate Governance. 2000s Creation of levels of corporate governance and the New Market (NM) level by the Stock Market from Sao Paulo (BOVESPA); WorldCom and Enron declare bankruptcy in July 30 th 2002 when the Law Sarnabes-Oxley Act was formulated; Formulation of the law /2007 in Brazil, improving the conditions of Law 64.04/76; Conversion to IFRS and creation of the CPC (Accounting Pronouncements Committee). Fonte: Adapted from CVM. 2012; Banco do Brasil. 2012; IBGC, 2012; Monks and Minon, 2004.

5 According to Blair (1995) and Shleifer &Vishny (1997), the governance practices includes all types of cultural, legal and institutional arrangements that determines what Publicly Traded Companies can do, how they are controlled, and how the risks and returns activities of control are distributed. In Brazil, the corporate governance practices were institutionalized in a very specific way that leads to some levels that ranges from the higher that is New Market to other lower degree of governance such as Levels 2 and 1. According to Carvalho (2002), the Stock Market Exchange in São Paulo (BM & F Bovespa today) based itself on the German experience (the Neuer Markt in December 11 th of 2000) to establish a separate list of organizations, called New Market. According Ribeiro Neto and Famá (2002) the "New Market Bovespa is a section focused on the negotiation of companies that submit themselves [voluntarily] to more advanced demands in terms of shareholders rights and best corporate practices. Therefore, the levels of Corporate Governance in Brazil are mainly: the New Market (NM), i.e. a stage in which companies are meeting all recommended procedures of CG, Level 1(L1), which is an introductory phase in CG practices, Level 2 (L2), which is a secondary phase where companies are seeking to fulfill more requirements in order to move forward towards NM. The figure 2 helps to check the differences among the levels of corporate governance:

6 Figure 2 : Levels of Corporate Governance in Brazil Levels of Corporate Governance and their main differences in Brazil NEW MARKET LEVEL 2 LEVEL 1 BOVESPA MAIS (MA) TRADITIONAL Share characteristic Only Ordinary Share (OS) OS and Preferred Share (PS) OS and PS OS and PS OS and PS Free Float At least 25% of free float Minimum condition of liquidity No rules Board composition At least 5 members, At least 3 members Financial demonstration Translated into english According to legislation Tag Along 100% for Ordinary Share 100% for OS and PS 100% for OS and 80% for Preferred Share 80% for OS 100% for OS 80% for OS Subordinate to the Arbitration Committee Obligatory Optional Obligatory optional Source: Adapted from BM&FBOVESPA, 2013.

7 To illustrate the evolution of CG in Brazil, we searched throughout the BM & FBOVESPA (2013) database, searching for the IPO companies between the period of 2004 to 2012 as follows: Table 1: Enterprises that went public in BM&FBOVESPA Companies that went public from 2004 to 2012 YEAR MA BDRs TR L1 L2 NM TOTAL TOTAIS % REP. 0,71% 5,67% 0,71% 5,67% 12,77% 74,47% 100,00% Legend: MA - Bovespa Mais; BRDs - Brazilian Depositary Receipts; TR. Traditional ; - L1 Level 1 of CG ; L2 Level 2 of CG ; NM New Market Between , 141 companies went public. Of these, 131 (92.9%), have been willing to be at levels 1, 2 and New Market (NM), which makes clear the trend that companies are likely to incorporate CG practices. It can be also observe that one company was still in the Traditional segment of the Stock Exchange during It is observed that the data collected through the years 2006 and 2007 represents the years in which there was the largest number of companies that went public: 90 (63.8% of total). 63 of these 90 companies (70%) chose to join the New Market fully meeting the requirements of CG practices. IBGC highlights that in Brazil the CVM - Brazilian Securities Commission - June 2002 disclosed to the market what it called a manual of Corporate Governance principles. This booklet was based on the principles emphasized in structuring the segment list proposed by BM & FBOVESPA, following the trends of CG practices. In this manual, CVM emphasizes its role as advisor to managers, independent auditors, controlling and minority shareholders through dialogue and understanding, concerning the recommended practices.

8 Although it is not obligatory for companies to adhere to practices GC, however, it is possible to realize that even being a voluntary process of attachment, the vast majority of companies that choose to go public, are concerned about adapting themselves to the recommended practices IBGC, since this could help to obtain legitimacy and better performance (AGUILERA; JACKSON, 2003; CERTO; HODGE, 2007; GORGA, 2004). The analysis of BM&FBOVESPA (2013) also provided a map of companies and their funds traded today according to figure 3. It would be effective to address some importante points thes companies: a) In amount traded on the BM&FBOVESPA, one can observe that traditional market companies still prevail and they represent almost 48% of the total amount; b) Despite it has been occurred a significant increase of the companies that are opting for their IPO, adhering to CG practices, this volume is still considered small relative to the total; c) The amount of fund traded by companies whose segment is classified as L1, L2 and NM represent 25,25% (1/4 of the total volume) according to Figure 3. It is noteworthy, however, that the segment MA (Bovespa Mais, with 0.42%) and MB (Over the counter Traditional, with 26.79%) provide evidence that this situation tends to change in the coming years, since segments MA and MB are segments that 'introduce' business knowledge of CG practices, which can lead subsequently to the adherence of these forms of management by organizations. d) Within this perspective, the stock market exchange in Brazil is expected to live for a long time with companies that continue to operate in the traditional way, which main feature is based on family-run ownership with no propensity to opening its capital, since its control would be unavoidably diluted. There will be also companies that follow the market trend on business management, because they understand the need to be more exposed and prone to the adoption of CG practices. These companies in future will easily find resources, since the trend demonstrated in the negotiations on the stock exchange points out the preference for shares offered by companies that opt for the CG in their management processes.

9 Figure 3. Sectorial classification of Enterprises and fund in BM&FBOVESPA DATA BASE: FEBRUARY 2013 (L1) Level 1 of Corporate Governance (NM) New Market (MB) Over the counter (L2) Level 2 of Corporate Governance (MA) Bovespa Mais (TR) Tradicional SECTOR LIST FROM BM&F BOVESPA Oil Gas and Biofuel L1 L2 NM MA MB TR TOTAL Sub-Total for Economical Sector Percent Representatation for Sector s list 0,00% 0,00% 30,77% 0,00% 38,46% 30,77% % TOTAL Basic Materials L1 L2 NM MA MB TR TOTAL ,28% 0,00% 19,15% 2,13% 14,89% 42,55% 100,00% Industrial Goods L1 L2 NM MA MB TR TOTAL ,89% 5,26% 26,32% 0,00% 7,89% 52,63% % TOTAL Construction-transport L1 L2 NM MA MB TR TOTAL ,00% 2,94% 44,12% 0,00% 13,24% 39,71% % TOTAL Non cyclic Consume L1 L2 NM MA MB TR TOTAL ,64% 0,00% 39,34% 0,00% 27,87% 31,15% % TOTAL Cyclic Consume L1 L2 NM MA MB TR TOTAL ,63% 3,95% 26,32% 0,00% 14,47% 52,63% % TOTAL Information Tecnology L1 L2 NM MA MB TR TOTAL ,00% 0,00% 22,73% 4,55% 63,64% 9,09% % TOTAL Telecommunication L1 L2 NM MA MB TR TOTAL ,33% 0,00% 8,33% 0,00% 16,67% 66,67% % TOTAL Public Utility L1 L2 NM MA MB TR TOTAL ,72% 5,56% 12,50% 1,39% 15,28% 55,56% % TOTAL Financial and others L1 L2 NM MA MB TR TOTAL ,00% 0,00% 0,00% 0,00% 73,17% 26,83% % TOTAL TOTAL L1 L2 NM MA MB TR TOTAL ,77% 2,38% 18,09% 0,42% 26,79% 47,55% % TOTAL

10 In a globalized market, organizations tend to seek new forms of management (such as CG) or managerial tools to enhance their competitiveness across borders and that lead us to the so called internationalization process of Brazilian Enterprises. Under this internationalization context, one can wonder whether the so called Brazilian Multinational companies are also getting involved with corporate governance practices and how CG is influencing their internationalization. It is a fact that Brazilian Multinationals can be classified as later entrants in the international market, which explains, in large part, according Cyrino and Penido (2007), its small number, given the dominant global companies. Internationalization of Brazilian Companies In recent years the so-called emerging countries (BRICS) have been drawing attention from the world due to their political and economic relevance and under this context, Brazilian companies have also initiated international activities on abroad that would be effective to clarify. Although the internationalization of Brazilian enterprises is still timid when compared to countries such as India and China for example, the rate of internationalization of Brazilian Companies is increasing, according to Fundação Dom Cabral (FDC) in its latest raking report of Brazilian Transnational Companies (2012). According Cyrino and Penido (2007) there is a big dilemma for Brazilian Companies today: Investing overseas or end up being bought by investors more powerful? The same authors mention that the Brazilian example is characterized by the increase of companies that strive to internationalize in a context of a relatively low national growth, and in most cases, to seek abroad the dynamism they lack internally. Honorio and Rodrigues (2006) mention that the internationalization of Brazilian companies has internal and external stimulus, which can be highlighted as follows: a) Internal - availability of unused production capacity; extra profit, production of goods with unique qualities; saturation / shrinkage / competition in the domestic

11 market; the need to reduce dependence and risk relating to the domestic market. b) External opportunity to receive eventual orders from the international market; opportunity for profit and growth in international markets, and encouragement from staff or external organizations. Cyrino and Penido (2007) mention that the main motivation to internationalize is economic, which may be accompanied by other reasons, all derived from the needs and dynamics of business growth. Given the uncertainties about the revenues on abroad, companies generally exhausted their possibilities for growth in their original markets before leaving for overseas ventures. Brazilian companies have used different entrance modes on abroad. Usually they begin by exporting their products mainly to closer markets in an attempt to minimize the so called "Psychic Distance"(HONÓRIO; RODRIGUES, 2006) that represents the degree of cultural and social differences between countries (JOHANSON; VAHLNE, 1977; JOHANSON; WIEDERSHEIM-PAUL, 1975). After this initial phase of exportation, Brazilian companies can opt for foreign direct investment (TERPSTRA; SARATHY, 2000; BUCLEY; CASSON, 1998; ROOT, 1994) on abroad through inaugurating a subsidiary for examples or other entrance modes as follows: "Some prefer to open offices on abroad to support their sales, while others send their disassembled products to be finished in the destination country, or even perform the steps of the chain value in the destination country." (FDC, 2012). Regardless of how Brazilian Multinational companies structure their internationalization process, these can be classified as later entrants in the international markets, which explains, in large part, according Cyrino and Penido (2007), their small number compared to the dominant global companies. According to the FDC (2012), 87.3% of the 47 companies surveyed see improvement in the image of Brazil on abroad and the consolidation of the Brazilian brand. Moreover, 61.9% now see the possibility of incorporating new technologies, methods and processes to the Brazilian industrial park with internationalization, and 60.3% estimate that the strengthening of the Brazilian

12 position in international forums and WTO (World Trade Organization) helps to legitimize international activities. Concerning the benefits of internationalization according to the perception of the surveyed companies, FDC (2012) measured that perception based on a Likert scale that ranges from 1 (not effective) to 5 (great benefit) as follows: i. Increasing the value of the brand due to international presence / Global Capacity for attending customers ( =4.2); ii. The company can differentiate itself from less internationalized or domestic competitors / Improvement of the company image in the domestic market ( =4.0) iii. Enhanced capacity for technological innovation / Development of skills with multicultural teams ( =3.7), iv. Access to international financial markets / Development of new products and segments ( =3.6); v. Economical improvement / Financial access to capital market on abroad ( =3.4); vi. Risk Reduction ( =3.3), vii. Cost Reduction ( =3.2). Although Brazilian companies have perceived numerous advantages to internationalize, the remaining question is whether or not these companies need to practice effectively Corporate Governance in their management processes for enhancing their internationalization process. As we can observe, Brazilian companies perceive the advantage of internationalization when they cited the opportunity to access capital market ( =3.4) on abroad, however practices of CG are not mentioned as a precondition for this specific topic during their internationalization process.

13 Research Methodology This research started from an unexplored field, and because of that it was effective to perform an exploratory study based on official secondary data basis concerning Brazilian Transnational companies by the Brazilian Raking of transnational companies from Fundação Dom Cabral (FDC) published in 2012 and the Brazilian future market and Stock Market from Sao Paulo (BM&F BOVESPA). The exploratory research has the purpose to provide more familiarity with a problem, in order to make it more explicit or even to build hypotheses. Its planning and techniques of data collection are quite flexible since we could perform an exploratory survey, a literature survey or even the analysis of examples that helps the comprehension of a certain phenomenon (SELLTIZ, 1967; GIL, 2010). The data obtained by FDC were based on a survey of 47 Brazilian companies that have overseas presence based on commercial offices, warehouses and distribution centers, assembly, manufacturing, services, banks or research and development (RD). It was not considered in this survey companies in early stages of internationalization that only export or perform through sales representatives. So first we analyzed the level of internationalization of these companies and then identified their level of corporate governance in BM&F BOVESPA databasis. The 10 Brazilian companies with the highest Transnationality index were also contacted to provide information about their corporate governance practices although access was restricted.

14 Results Among 47 Brazilian Multinationals (FDC 2012), 29 of them (62%) are listed in BM&F BOVESPA, which is based on practices recommended by Corporate Governance (CG) from IBGC. Of this total, 20 belong to the New Market (NM), ie a stage in which companies are meeting all recommended procedures of CG, and 6 are in level 1 (L1), which is an introductory phase in CG practices, and 3 of them are on level 2 (L2), which is a secondary phase where these companies are seeking to fulfill more requirements in order to move forward towards New Market (NM). Therefore, from a total of 47 businesses, 18 of them (38%) have not yet diluted their ownership control or are at lower levels of negotiation. Among these 18 private companies, 12 companies do not even appear as listed on the BM & FBOVESPA, ie not publicly traded companies, which means concentration of ownership control. It was found out via their institutional website that these companies are family owned. The table 1 shows the Position of the Brazilian international companies (Pos.) according to their Transnationality Index and their respective position in the BM&F BOVESP concerning the level of CG as follows:

15 Table 1: Brazilian Transnational Ranking 2012 e their level of CG Pos. Ranking by Transnationality Index Index TI BV Pos. Ranking by Transnationality Index Index TI 1 JBS-Friboi 0,538 NM 25 América Latina 0,091 NM 2 Gerdau 0,516 L1 26 Petrobrás 0,082 TR 3 Stafenini IT 0,464 N/C 27 Minerva 0,065 NM 4 Metalfrio 0,452 NM 28 Bematech 0,045 NM 5 Marfrig 0,444 NM 29 Banco do Brasil 0,043 NM 6 Ibope 0,438 N/C 30 BRQ IT Services 0,040 N/C 7 Odebrecht 0,424 N/C 31 Alusa 0,036 N/C 8 Sabó 0,363 N/C 32 Bradesco S.A. 0,034 L1 9 Magnesita 0,361 NM 33 Ultrapar 0,033 NM 10 Tigre 0,298 N/C 34 Gol 0,030 L2 11 Suzano Papel. e 0,283 L1 35 Randon 0,024 L1 12 Vale 0,278 L1 36 Eliane 0,024 N/C 13 Weg 0,246 NM 37 Totvs 0,020 NM 14 Brasil Foods 0,238 NM 38 Tam 0,020 L2 15 Ci&T 0,195 N/C 39 DHB 0,012 TR 16 Artecola 0,194 N/C 40 Porto Seguro 0,008 NM 17 Embraer 0,173 NM 41 Oi 0,004 TR 18 Camargo Corrêa 0,165 NM 42 Tegma 0,003 NM 19 Marcopolo 0,149 L2 43 Seculus 0,002 N/C 20 Agrale 0,130 N/C 44 Cemig 0,001 BO 21 Andrade 0,123 BO 45 Portobello 0,001 NM 22 Natura 0,119 NM 46 Eletrobrás* 0,000 TR 23 Cia Providência 0,107 NM 47 M.Dias Branco* 0,000 NM 24 Itaú-Unibanco 0,100 L1 * Índex inferior to 0,0 Inferior a 0,001 Source: Adapted from FDC 2012; BM&FBOVESPA BV Abbreviations: BO - Operation OTC / NM - New Market / L1 - Level 1 GC / L2 - Level 2 GC / N/C - Company is not listed on the BM & FBOVESPA / TR Enterprise from Traditional Market / BV - Rating BM & FBOVESPA. The Transnationality Index (TI), is based on the internationalization index of UNCTAD - United Nations Conference on Trade and Development: TI = Assets on abroad + Revenue on abroad + Employees on abroad Total assets Total Revenue Total employees It is interesting to observe from Table 1 that many Brazilian companies belong to sectors different from commodities such as information technology, public

16 opinion and research institue (IBOPE), airplanes and jets (Embraer), banking (Itaú-Unibanco), Logistics (Tegma), air companies (Gol) and so on. Perhaps it would be the case of point out that Brazil would not fit the common characterization of a south American commodity country that is quite usual in international market. From the Table 1, we detected the distribution of Brazilian Multinationals concerning their levels of corporate governance as follows: Table 2. Ranking of Brazilian Multinationals / Level of CG according to BM & F BOVESPA Ranking of Brazilian Multinationals / Level of CG according to BM & F BOVESPA Classification in the Number % of Observation Stock Market total New Market (NM) 20 42,55 Advanced Practices of CG Level 1 CG 6 12,77 Minimum Level Practice of CG Level 2 of CG 3 6,38 Intermediate Level Practice of CG Over the counter (OTC) 2 4,26 Without CG Tradicional Enterprise 4 8,51 Capital is diluted but there are no negotiations Not listed 12 25,53 Capital is not diluted Totais ,00 Source: Adapted from FDC 2012; BM&FBOVESPA Therefore, data from Table 1 when confronted with Table 2 suggest that Brazilian Multinational Companies do not seem to be particular about CG practices, considering that among the 10 companies with the highest Transnationality index, half of them do not even appear in the list of BM & FBOVESPA ( i.e. not publicly traded company). However, Mendes da Silva et al (2009) and Silveira, Barros and Famá (2006) affirm that even if Brazilian companies do not participate in formal levels of CG in BM&F Bovespa, many of them are improving their inner mechanisms of governance. Perhaps it would be the case of these companies on abroad but we decided to contact the 12

17 companies not listed in BM&F BOVESPA thought their institutional . The following questions were made to these 12 not publicly traded companies: a) Does your company have ever been a publicly traded company in the past? b) Does your company adopt practices of Corporate Governance even without been a publicly traded company? From these 12 companies, only one confirmed that adopt CG practices even without being a publicly traded company. Other 11 companies did not answered or provide any information to this first inquire.

18 Concluding remarks As an exploratory research, this article aimed at investigating the configuration of corporate governance (CG) in Brazilian multinationals. By analyzing official secondary data from the Raking of Brazilian Transnational Enterprises and BM&F BOVESPA, it was possible to identify the levels of corporate governance of 47 Brazilian Multinationals. We also found out that among these 47 companies a lot of them belongs to sectors concerning information technology, logistics, research, airplanes, etc. This would help to minimize the stereotype of Brazil as a commodity country. In our results, we observed that among the 10 most internationalized Brazilian companies, only half of them are particular about corporate governance (CG) and CG does not seem to be a precondition for internationalization, since 25% of the 47 most internationalized companies are not publicly traded companies. Although companies can show practices of CG without been officially publicly traded companies, the overall data showed that CG is still incipient among Brazilian Multinationals. The CG configurations of those companies that adhere to New Market are marked by great concern for transparency and all principles of governance. Therefore, since we dealt with official data basis, it was possible to infer that official CG does not seem to be a precondition for internationalization of Brazilian Enterprises or even a main concern for their management. Although Brazil has moving forward towards corporate governance and dilution of ownership control, with transparence and information disclosure for investors, a considerable number of Brazilian Multinationals are still family owned with considerable resistance to CG. Since this article was based in an exploratory research, we plan to develop a survey in these Multinational Brazilian Companies to identify the management practices and their fitness to principles of governance from now on.

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