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Ownership And Capital Structure Of Chilean Conglomerates:Facts And Hypotheses For Governance

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  • FERNANDO LEFORT

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

  • EDUARDO WALKER

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

Abstract

In this paper we provide an accurate descriptive analysis of consolidated ownership and capital structures in Chilean conglomerates, emphasizing the implications of these structures for corporate governance. We avoid double counting investments made through pyramid schemes, and consider the universe of non-financial firms registered at the Superintendencia de Seguros y Valores (SVS). We find that economic groups are the predominant form of corporate structure in Chile, and that the most common way of separating control from cash-flow rights in Chilean conglomerates is through pyramid schemes. These schemes have proven to be successful in raising external funding. Controllers of Chilean conglomerates rely in a relatively small number of people in order to conduct business, and these people participate exclusively as board members of corporations affiliated to their group. However, controllers of Chilean conglomerates hold more equity than strictly needed for control, suggesting that cash-flow benefits associated to subsidiaries are relatively large. Finally, pension funds and ADRs constitute a significant minority shareholder in Chilean groups.

Suggested Citation

  • Fernando Lefort & Eduardo Walker, 2000. "Ownership And Capital Structure Of Chilean Conglomerates:Facts And Hypotheses For Governance," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 3(1), pages 3-27.
    • Handle: RePEc:pch:abante:v:3:y:2000:i:1:p:3-27
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Corporate Governance; Conglomerates; Capital Structure; Chile; Emerging Economies;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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