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Ownership And Control Structure Of Brazilian Companies

Author

Listed:
  • 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.)

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.

Suggested Citation

  • Sílvia Mourthé Valadares & Ricardo Pereira Câmara Leal, 2000. "Ownership And Control Structure Of Brazilian Companies," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 3(1), pages 29-56.
    • Handle: RePEc:pch:abante:v:3:y:2000:i:1:p:29-56
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. repec:idb:brikps:66858 is not listed on IDEAS
    4. 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.
    5. Lazzarini, Sergio G. & Musacchio, Aldo, 2010. "Leviathan as a Minority Shareholder: A Study of Equity Purchases by the Brazilian National Development Bank (BNDES), 1995-2003," Insper Working Papers wpe_221, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    6. Bunkanwanicha, Pramuan & Gupta, Jyoti & Wiwattanakantang, Yupana, 2016. "Pyramidal group structure and bank risk in Thailand," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 272-288.
    7. Alves, Paulo & Ferreira, Miguel, 2008. "Who Owns the Largest Firms Around the World?," MPRA Paper 52355, University Library of Munich, Germany.
    8. Abreu, Mariana Piaia & Grassi, Rosanna & Del-Vecchio, Renata R., 2019. "Structure of control in financial networks: An application to the Brazilian stock market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 522(C), pages 302-314.
    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. Marta Leite Collares, 2020. "Corporate Governance: A Major Factor in Shareholder Activism in Brazil," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 24(5), pages 414-431.
    11. 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.
    12. Bernard S. Black & Antonio Gledson de Carvalho & Érica C. R. Gorga, 2009. "The Corporate Governance of Privately Controlled Brazilian Firms," Brazilian Review of Finance, Brazilian Society of Finance, vol. 7(4), pages 385-428.
    13. Eduardo Schiehll & Paulo Terra & Fernanda Victor, 2013. "Determinants of voluntary executive stock option disclosure in Brazil," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 331-361, May.
    14. 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.
    15. 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.
    16. Diego Cueto & Lorne Switzer, 2015. "Intraday market liquidity, corporate governance, and ownership structure in markets with weak shareholder protection: evidence from Brazil and Chile," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(2), pages 395-419, May.
    17. Cueto, Diego C., 2013. "Substitutability and complementarity of corporate governance mechanisms in Latin America," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 310-325.

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    More about this item

    Keywords

    Corporate Governance; Ownership Structure; Agency Conflicts; Minority Shareholders;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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