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The Government as a Large Shareholder: Impact on Firm Value and Corporate Governance

Author

Listed:
  • Marcelo Fernandes

    (Queen Mary University of London and Sao Paulo School of Economics, FGV)

  • Walter Novaes

    (PUC-Rio)

Abstract

The subprime crisis led to a wave of government interventions in the private sector that has been particularly strong in Europe and Latin America, where several governments are large shareholders in a variety of public firms. In a sense, the subprime crisis induced these governments to behave as active large shareholders. This paper uses a sample of public firms in Brazil to show that government activism lowers the value of minority shareholders' voting rights. While the corporate governance literature usually associates lower voting premia with stronger protection of minority shareholders, we provide evidence that the government-induced decline in the value of voting rights harmed minority shareholders in Brazil.

Suggested Citation

  • Marcelo Fernandes & Walter Novaes, 2015. "The Government as a Large Shareholder: Impact on Firm Value and Corporate Governance," Working Papers 772, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:772
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Interventionism; Monitoring; Private benefits; Voting premium;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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