08/04/2020

Corporate governance plays a key role in times of crisis, highlights expert.

“It is important that controllers, directors and administrators have a good relationship channel, clearly explaining to society and its small shareholders what is happening and what is being done to improve the company’s situation at least in the medium term”, highlights Joaquim Rubens Fontes Filho.

The COVID-19 pandemic we are experiencing poses numerous problems for society. In addition to the public health problem, there is a severe impact on the economy, which is already beginning to be felt in Brazil. The professor at the Brazilian School of Public and Business Education, professor Joaquim Rubens Fontes Filho, talks about the importance of Corporate Governance in times of crisis for the web series FGV – Impacts of COVID-19.

According to the professor, the results of companies are already being drastically impaired and this is also reflected in the stock exchange, where stock prices fell by more than 40% in two months in Brazil. “The Stock Exchange is not just about the movement of great speculators. Above all, exchanges are important spaces for companies to seek resources for new projects, development of new products, expansion of markets, in short, to remain competitive in the market. At a time when your results may be adversely affected in the long run, it is natural that the stock price collapses, as is currently happening in Brazil ”, he explains.

He believes that this movement should remain for some time yet, but that companies should be prepared for the moment of the resumption. He points out that organizations must be prepared to properly maintain the institutional relationships that have been built up over time between market agents and society.

Joaquim Rubens points out that, at this moment, corporate governance assumes a fundamental role, as it deals with the relationship between the partners and with the society itself. He recalls two important groups in this structure. The first of these are small investors, who, with less chance of diversifying their investments, will be severely impacted by the crisis. He points out that the departure of these agents can cause liquidity problems for companies, which will have much more difficulties in raising funds. Another important group is employees, who are part of a company’s fundamental set of stakeholders.

“Corporate governance means equity in the treatment of partners and transparency in relations. It is important, then, that controllers, directors and administrators have a good relationship channel, clearly explaining to society and its small shareholders what is happening and what is being done to improve the company’s situation at least in the medium term ”, he highlights. The professor concludes by saying that it is essential to seek these good practices and to be able to build, or at least maintain, market stability and companies’ access to these resources.

 

Watch the interview: https://www.youtube.com/watch?v=00m1TiKD0aM&feature=emb_logo

 

Author: fgv Source fgv