The Ownership Concentration in Brazil: Analysis of the Impact on Performance, Value and Risk of Companies
Keywords:
Incentive-effect. Etrenchment-effect. Value. Performance. Risk.?Abstract
The structure of corporate governance in Brazil is noticeable by the strong concentration of ownership and control by a shareholder or a control block. The theory reveals the potential impacts of ownership concentration on corporate performance through the incentive-effect and entrenchment-effect. Initially, the existence of a controller tends to reduce agency costs incurred by the company and, therefore, it represents benefits. However, high levels of ownership concentration may result in expropriation of minority shareholders. In addition to empirically verify the effectiveness of a corporate governance mechanism for performance, this study wanted to evaluate the extent to which ownership structure affects the external risk companies. Then, the main objective of this research was to investigate the relationship between the structure of ownership and control and value, performance and risk of non-financial Brazilian companies listed on the BM&FBovespa between the years 2004 to 2012. This research is classified as descriptive, quantitative and used secondary data collected from the database Economática®, data from the Securities Commission (CVM) and BM& FBovespa site. Econometric procedures involved the use of the regression model with panel data. The results revealed a negative and statistically significant relationship between concentration of voting rights and market value (measured by Tobin's Q), corroborating Claessens et al. (2002) and the entrenchment-effect. The performance variables (ROA and EBITDA) and risk (volatility of stock returns) were not statistically significantly affected by ownership concentration. Concerning the crisis dummies, specially the 2008´s financial crisis, the significance and negative sign in the specification value indicated that the occurrence of return shocks, the most concentrated structures penalize the firm value. About the models whose dependent variable was the risk, dummies alternate signal as the period, and it means that, at the height of the crisis, the more concentrated companies have higher volatility, but, after the critical crisis period, this same structure ownership and control reduced volatility.
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