Research proposal for: Corporate Governance in Latin America and the Caribbean: The Case of Board of Directors in Venezuela

When financial markets are not well developed and when shareholders are not well protected, the role of the board of directors becomes more important as the only available control mechanism for management opportunism. Venezuela is an ideal case study to test this proposition because both of these issues are particularly severe. The specific question that we want to answer is: Does corporate the governance mechanism work in Venezuela? That is, is there evidence that board remove executives after a period of bad performance? If the answer to this fundamental question is positive, two other issues arise: first, what are the determinants of board structure in Venezuela? In particular, what determines characteristics such as board’s size and proportion of independent outside directors; and, second, does the board composition have any effect on firm performance? That is, can we empirically find evidence that some board compositions are better than others in terms of firm performance in the context of the Venezuelan market?