This study examines whether formal governance mechanisms, namely board independence, remuneration committees, and ownership concentration, are associated with pay-performance alignment and firm outcomes in Brazilian listed firms. Using a cross-sectional sample of 222 non-financial firms listed on Brazil's Stock Exchange (B3) for fiscal year 2024, the study estimates ordinary least squares models with Enterprise Value and Return on Equity as dependent variables. Explanatory variables capture incentive alignment and internal governance structures, while firm size and risk-adjusted returns are included as controls. The results show that firm size and, to a lesser extent, risk-adjusted performance explain variation in firm outcomes, while governance-related variables do not exhibit statistically significant associations with either valuation or profitability. These findings suggest a gap between the formal adoption of governance structures and their substantive effectiveness in an emerging market characterized by concentrated ownership and heterogeneous governance practices. The cross-sectional design limits causal inference. Overall, the findings suggest that governance quality should be assessed not only through formal structures, but also through effective implementation and board behavior.
Teixeira et al. (Tue,) studied this question.