ABSTRACT
State-owned companies are responsible for a significant part of Brazilian economic activity. In August 2015 there were 30 state-owned companies listed on the Brazilian Stock Exchange (BM&FBOVESPA 2015). These companies represented almost 15% of market capitalization and over 20% of average daily trading volume (BM&FBOVESPA 2015). Due to the importance of these companies, a significant impact was made by the announcement by Petrobras (2015), the giant Brazilian state-owned oil company, in its consolidated financial statements for the third quarter of 2014, of a write-off of US$2.53 billion related to an illegal payment scheme uncovered by the investigations of the Operação Lava-Jato (Car Wash Operation). This is a federal police investigation into fraud, corruption, and money laundering involving former executives of Petrobras and the main Brazilian construction companies.
