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The Role of Ownership Concentration and Debt in Downturns: Evidence from Brazilian Firms During the 2008–9 Financial Crisis

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  • Claudio M. P. da Cunha
  • Patricia M. Bortolon

Abstract

This article aims to reconcile conflicting literature about the role of ownership concentration in the responsiveness of stock prices to macroeconomic shocks. We modified a previous theoretical model, adding leverage as a disciplining device. An important implication of our model is that only in deep crises ownership concentration plays a role in attenuating the effect of macroeconomic shock on firm value. We test this hypothesis using a sample of Brazilian firms during distinct phases of the 2008–9 crisis. Our empirical analyzes shows that only in the most critical part of the crisis, ownership concentration reduced the negative effects of the financial crisis.

Suggested Citation

  • Claudio M. P. da Cunha & Patricia M. Bortolon, 2016. "The Role of Ownership Concentration and Debt in Downturns: Evidence from Brazilian Firms During the 2008–9 Financial Crisis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(11), pages 2610-2623, November.
    • Handle: RePEc:mes:emfitr:v:52:y:2016:i:11:p:2610-2623
    DOI: 10.1080/1540496X.2015.1087793
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    Cited by:

    1. Lai, Shaojie & Liang, Hongyan & Liu, Zilong & Pu, Xiaoling & Zhang, Jianing, 2022. "Ownership concentration among entrepreneurial firms: The growth-control trade-off," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 122-140.
    2. Ichiro Iwasaki & Satoshi Mizobata, 2020. "Ownership Concentration and Firm Performance in European Emerging Economies: A Meta-Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(1), pages 32-67, January.

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