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Ownership And Control Structure Of Brazilian Companies

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  • SÍLVIA MOURTHÉ VALADARES

    (Associate Chief Economist, Ministry of Planning, Budget and Management, Brasilia.)

  • RICARDO PEREIRA CÂMARA LEAL

    (Dean, The COPPEAD Graduate School of Business, Universidade Federal do Rio de Janeiro.)

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    Abstract

    This paper analyzes the structure of ownership and control of public Brazilian companies using data from 325 companies listed at the São Paulo Stock Exchange. We show a high degree of ownership concentration. The major shareholder has, on average, 41 percent of the equity capital, while the five major have 61 percent. Concentration occurs mainly with voting shares with 62 percent of the companies having one shareholder with more than 50 percent of the voting shares. Actually, the violation of the one share-one vote rule with the use of non-voting shares is very common. Only 11 percent of the companies do not have non voting shares and the companies have, on average, only 54 percent of their equity capital as voting capital. We also analyze the indirect ownership structure. Pyramiding structure is not commonly used as a way of violating the one share - one vote rule. Control is maintained through more than one tier. We also show the importance of different shareholder classes. Corporations are the main investor category in the direct ownership structure while individuals are more important when indirect control is accounted for.

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    Bibliographic Info

    Article provided by Escuela de Administracion. Pontificia Universidad Católica de Chile. in its journal ABANTE.

    Volume (Year): 3 (2000)
    Issue (Month): 1 ()
    Pages: 29-56

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    Handle: RePEc:pch:abante:v:3:y:2000:i:1:p:29-56

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    Related research

    Keywords: Corporate Governance; Ownership Structure; Agency Conflicts; Minority Shareholders;

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    References

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    1. Leland, Hayne E & Pyle, David H, 1977. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Journal of Finance, American Finance Association, vol. 32(2), pages 371-87, May.
    2. Franks, Julian & Mayer, Colin, 1998. "Bank control, takeovers and corporate governance in Germany," Journal of Banking & Finance, Elsevier, vol. 22(10-11), pages 1385-1403, October.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Armando Gomes, . "Going Public with Asymmetric Information, Agency Costs and Dynamic Trading," Rodney L. White Center for Financial Research Working Papers 09-97, Wharton School Rodney L. White Center for Financial Research.
    5. Shleifer, Andrei & Vishny, Robert W., 1986. "Large Shareholders and Corporate Control," Scholarly Articles 3606237, Harvard University Department of Economics.
    6. Armando Gomes, . "Going Public with Asymmetric Information, Agency Costs and Dynamic Trading," Rodney L. White Center for Financial Research Working Papers 9-97, Wharton School Rodney L. White Center for Financial Research.
    7. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998. "Law and Finance," Scholarly Articles 3451310, Harvard University Department of Economics.
    8. Bradley, Michael, 1980. "Interfirm Tender Offers and the Market for Corporate Control," The Journal of Business, University of Chicago Press, vol. 53(4), pages 345-76, October.
    9. Andrei Shleifer & Robert W. Vishny, 1996. "A Survey of Corporate Governance," NBER Working Papers 5554, National Bureau of Economic Research, Inc.
    10. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
    11. Bergstrom, Clas & Rydqvist, Kristian, 1990. "The determinants of corporate ownership : An empirical study on Swedish data," Journal of Banking & Finance, Elsevier, vol. 14(2-3), pages 237-253, August.
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    Cited by:
    1. Fernando Lefort, 2005. "Ownership Structure And Corporate Governance In Latin America," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 8(1), pages 55-84.
    2. Fernando Lefort & Eduardo Walker, 2000. "Corporate Governance: Challenges For Latin America," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 2(2), pages 99-111.
    3. Eduardo Schiehll & Paulo Terra & Fernanda Victor, 2013. "Determinants of voluntary executive stock option disclosure in Brazil," Journal of Management and Governance, Springer, vol. 17(2), pages 331-361, May.
    4. Black, Bernard S. & de Carvalho, Antonio Gledson & Gorga, Érica, 2012. "What matters and for which firms for corporate governance in emerging markets? Evidence from Brazil (and other BRIK countries)," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 934-952.
    5. Boubakri, Narjess & Ghouma, Hatem, 2010. "Control/ownership structure, creditor rights protection, and the cost of debt financing: International evidence," Journal of Banking & Finance, Elsevier, vol. 34(10), pages 2481-2499, October.
    6. Sergio G. Lazzarini & Aldo Musacchio, 2011. "Leviathan as a Minority Shareholder: A Study of Equity Purchases by the Brazilian National Development Bank (BNDES), 1995-2003," Harvard Business School Working Papers 11-073, Harvard Business School.
    7. repec:idb:brikps:66858 is not listed on IDEAS
    8. Ricardo Leal & André Carvalhal-da-Silva, 2005. "Corporate Governance and Value in Brazil (and in Chile)," Research Department Publications 3208, Inter-American Development Bank, Research Department.
    9. Black, Bernard S. & de Carvalho, Antonio Gledson & Gorga, Érica, 2010. "Corporate governance in Brazil," Emerging Markets Review, Elsevier, vol. 11(1), pages 21-38, March.
    10. Ricardo Leal & André Carvalhal-da-Silva, 2005. "Conducción y valor empresarial en Brasil (y Chile)," Research Department Publications 3209, Inter-American Development Bank, Research Department.
    11. Alves, Paulo & Ferreira, Miguel, 2008. "Who Owns the Largest Firms Around the World?," MPRA Paper 52355, University Library of Munich, Germany.

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