Corporate Governance in Costa Rica
Gilberto E. Arce
Edgar Robles C.
This paper examines corporate governance practices in Costa Rica. First, it estimates corporate governance charter measures using firm-level data for 87 Costa Rican firms and studies their impact on the firms` performance; here, the mean of the corporate governance charters for the publicly traded firms is equal to 56. 14. Second, new evidence is presented on de jure and de facto corporate governance charter measures at the firm level and on their effect on the performance of the firm. The results indicate that de facto corporate governance is better than de jure corporate governance. These results suggest that firms must implement a set of additional measures to compensate for the weakness of the legal environment. Also, evidence is presented that better corporate governance and charter measures are associated with superior firm performance. Third, this paper examines the final controllers of publicly and non-publicly traded firms and links them with their dividend policies. Family firms are common in Costa Rica and are not necessarily linked to better firm performance. Fourth, the ownership evolution of Costa Rican firms is studied. Finally, changes in the Commercial Code are examined from a good corporate governance practices view.