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1 - Introduction

Published online by Cambridge University Press:  30 January 2010

Aldo Musacchio
Affiliation:
Harvard Business School
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Summary

At the end of 2007, the financial press celebrated that the São Paulo Stock Exchange (Bovespa) had successfully promoted the issue of new shares for 27 companies in that year alone. Abetted by low interest rates and improvements in corporate governance, corporations in Brazil had accomplished what seemed to be an all-time record number of initial public offerings (IPOs) in a single year. 1 Yet, Brazil experienced a period of relative stability in interest rates and intense activity in stock markets before 1920 that by some measures represents even more of an historical peak than today's boom. Many of the better years between 1890 and 1913 saw more than 30 new initial public offerings of stock on the Rio de Janeiro and São Paulo stock exchanges combined. Moreover, both the number of traded companies per million people (a common measure of stock market development) and the capitalization of corporate bond issues to gross domestic product (GDP) were nearly twice at the beginning of the twentieth century than they are today. How did Brazil develop such an impressive market for corporate securities – perhaps even more impressive than today's market – before World War I?

This book examines the institutional conditions that prevailed at the turn of the twentieth century when Brazilian companies were selling large amounts of equity and bonds to foreign and domestic investors. The argument of the book is that in a relatively favorable macroeconomic environment, with significant flows of external capital, Brazilian corporations were able to attract large numbers of shareholders and bondholders by providing protections against potential mismanagement and abuse by managers and insiders.

Type
Chapter
Information
Experiments in Financial Democracy
Corporate Governance and Financial Development in Brazil, 1882–1950
, pp. 1 - 27
Publisher: Cambridge University Press
Print publication year: 2009

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  • Introduction
  • Aldo Musacchio, Harvard Business School
  • Book: Experiments in Financial Democracy
  • Online publication: 30 January 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511635427.002
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  • Introduction
  • Aldo Musacchio, Harvard Business School
  • Book: Experiments in Financial Democracy
  • Online publication: 30 January 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511635427.002
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Introduction
  • Aldo Musacchio, Harvard Business School
  • Book: Experiments in Financial Democracy
  • Online publication: 30 January 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511635427.002
Available formats
×