By Christian Fernandes Gomes da Rosa

The importance of companies as institutions lies in the fact that they are efficient means of generating value for society and for their partners or shareholders. On the one hand, they are an organized form of optimized production of goods and services and thus increase the availability of supply, increasing diversity and reducing the price of what is brought to the market. On the other hand, companies directly increase national wealth, measured by the Gross Domestic Product (GDP).

However, as in any institution, conflicts of interest between its different stakeholders are to be expected. stakeholders. It is up to the Law, together with other available instruments, to promote transparency, mediation and treatment of these conflicts. It is in this field that the compliance has been identified as a strategic, indispensable instrument

There are conflicts between partners and shareholders and managers, which is widely studied by the theory of agency conflicts. For the present analysis, it is enough to recognize that managers, in the exercise of their activities, could hypothetically wish to use the powers of the mandate they received from partners/shareholders (or their representatives) to seek their own benefit, such as increasing their income or comfort, even at the expense of the agent's interest, cost reduction and greater efficiency of the company's operations.

At this point, the explicit adoption by administrators of a governance, transparency, control and compliance agenda gives a clear signal of their commitment to the interests of the agents they represent. Indirectly, the voluntary adoption of transparency and control criteria – beyond those strictly required by law – maximizes the reputation and perception of control of business corporations as organizations, with a positive result on their market value.

Another favorable point of adopting best practices is the subject of studies on information asymmetry, which arise from the perception – almost obvious – that different stakeholders tend to have different information about the asset or the operation in which they are involved. In this field, compliance and transparency play a fundamental role, since reducing information asymmetry reduces uncertainty and increases the market value of companies. Economic studies from the 1970s already demonstrated that, in the face of uncertainty and doubts about the effective conditions of the asset, there is an underpricing of the asset. This is because, faced with the possibility that the non-visible characteristics of the asset deteriorate its value, potential buyers tend to price the asset negatively. It is true that this manifests itself, in its own way, in the value of business corporations.

A commitment to transparency practices, when well planned and executed, reduces the scope for uncertainty and the perception of insecurity among potential market players. As a result, there is less room for doubt and underpricing of equity rights, increasing the value of the company – especially for shareholders.

It is also possible to identify conflicts of interest between current and future administrators and partners/shareholders. This is a little-discussed aspect of corporate sustainability and the effects of business decisions over time (short or long term). In this field, the adoption by companies of a system for identifying, assessing and treating the legal risks of the business demonstrates the commitment to sustainable growth and the longevity of the business activity.

Current business decisions are made in a way that rationalizes the present benefit and the possible future harmful results of each conduct. In this sense, paying a bribe to obtain a large contract is not profitable when the negative future consequences of this decision are taken into account.

A compliance program is capable of monitoring decision-making processes and preventing the practice of acts that, although apparently advantageous in the short term, prove to be extremely costly in the long term, since they would be to the detriment of longevity and continuous generation of value for partners/shareholders.

Failure to comply with standards applicable to business practices, as well as failure to adopt good practices in decision-making processes, have a direct and negative impact on the sustainability of any business corporation. In more mature markets, it is possible to empirically measure this variable, but even in emerging markets such as Brazil, there are already many examples of how costly non-compliance can be.

Thus, for administrators, as well as partners/shareholders, the implementation of a compliance program, based on values such as transparency and control, is an expression of a decision to protect and add value to the business society, improving and making the development of this institution sustainable, so that it can continue generating value for society and its partners and shareholders.