Activism and the Request for Establishment of the Fiscal Council: influence of Monitoring, Performance, and Ownership Structure

Patricia Maria Bortolon, Layziane Souza Silva, Lucas Ayres Barreira de Campos Barros


Objective: This paper investigates if indicators of monitoring, ownership structure, and performance are related to the likelihood of a Brazilian firm to receive formal requests to establish a Fiscal Council (FC). Such a request may be understood as a manifestation of activism since it indicates the shareholders’ willingness to increase oversight over the management.

Method: Firms that received formal requests to establish Fiscal Councils and firms without FCs were observed between 2010 and 2016. The two groups were compared, and logit models were employed to analyze the variables related to the odds in favor of the event.

Originality/relevance: The research contributes to the emerging literature on activism in Brazil and it is a pioneer in the investigation of a governance body, unusual in the global scenario.

Results: The likelihood of the event is positively related to board size and negatively related to the presence of an audit committee. The association between performance and the likelihood of receiving a request is negative, in line with evidence from the literature. The request to establish a FC is more likely to occur in firms with shareholders’ agreements, which suggests a negative reaction to this mechanism by the shareholders concerning the articulation of control.

Theoretical/methodological contributions: The results contribute to the academic debate about how different corporate governance mechanisms complement or substitute  each other and the drivers of shareholders’ activism.

Social and managerial contributions: The findings may help firms to anticipate this type of demand, which is facilitated after the implementation of the distance voting.



activism; fiscal council; audit committee; shareholders’ agreement; minority shareholders.


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