Jose Luis Rivas’s book on Mexican corporate governance represents an outstanding contribution to knowledge about corporate governance not only in Mexico, but also in developing countries more generally. This book represents an excellent starting place for anyone interested in researching corporate governance in contexts outside the United States or the United Kingdom. Most research on corporate governance is dominated by theory and evidence from the two large developed countries, and our understanding of corporate governance more generally is perhaps harmed by an overreliance on these two countries. Jose’s book starts with a deep understanding that context matters in corporate governance, and that context involves institutions that extend to political and legal systems as well as social and cultural mores.
Starting from the perspective that institutions are critical to good corporate governance, the book describes the state of many of the institutions that are relevant to governance in Mexico. Factors that make Mexican corporate governance substantially different from that in the United States and the United Kingdom are highlighted. Factors like expropriation of investor wealth by controlling shareholders, challenges in setting up businesses in Mexico, difficulties in contract enforcement and the seeking of legal remedies, and the very dominant role that families and political influence have on publicly traded corporations in Mexico are all described both qualitatively and with statistical evidence.
The author is well steeped in the Mexican context. He was born and raised in Mexico, and aside for a few brief stints (MBA at Northwestern, a PhD at IE Business School, and a year-long visit to Arizona State University), he has spent his life there. At the same time, he is a close observer of corporate governance in the US context and has ongoing research projects focused on the United States as well as Latin America.
One of the great gems in the book is Jose’s interview with Jaime Serra-Puche—an executive with wide experience as a director in both Mexican and US firms. The interview highlights in rather stark terms the differences in how boards function in Mexico relative to the United States. It also illustrates how deeply culturally embedded the corporate governance differences are, highlighting the challenges for policy makers who want to make corporate governance in Mexico more efficient and effective. The interview is brief, but the subject is honest and forthright about his own experiences and observations, and the reader walks away with a much deeper understanding of the issues at hand.
The book also provides an absolute wealth of hand-collected data, conveyed through figures and tables. All of this data is used to both illustrate assertions made by the author and provide empirical evidence to support the conclusions drawn by the author. Importantly, the data can also be used by readers not only for quick tests of intuitive predictions, but also as a starting point for much deeper and richer data collection efforts. Jose’s suggestions for issues to study moving forward serve as a good guide for those interested in taking the next steps to better understand corporate governance in developing countries.
Albert Cannella, Jr.
Endowed Chair
Texas A&M University