Pyramidal Ownership Structures and Its Effects on Firm Value: The Case of Going Public Companies in Brazil during 2004 to 2007 (Portuguese)

21 Pages Posted: 22 Jun 2009

See all articles by Renata Macedo Verne

Renata Macedo Verne

affiliation not provided to SSRN

Rafael Liza Santos

University of São Paulo (FEA-USP) - School of Economics, Management and Accounting

Fernando Postali

University of São Paulo (USP) - Department of Economics

Date Written: June 21, 2009

Abstract

This paper aims to analyze the ownership structure of 100 companies that went public in the Sao Paulo Stock Exchange (BOVESPA) during 2004 to 2007. We assess, particularly, the effect of pyramidal ownership structures on firm’s market value. In order to do so, we collect data on the firm’s ownership structure, available from the IPO prospectus, and other financial variables. We analyze the information trough different econometric models. The results show that 60% of the going public companies present some sort of pyramidal ownership structure, and the ultimate controlling shareholder owns, on average, 48% of the firm’s voting shares right after the IPO. Our results also present evidence that pyramidal ownership structures affect negatively the firm value: on average, companies controlled through pyramidal structures have a lower stock return, ceteris paribus. The effects on price-to-book value, however, are not conclusive. (Paper written in portuguese)

Keywords: ownership structure, pyramidal ownership, IPOs, firm value

JEL Classification: G32, G34

Suggested Citation

Verne, Renata Macedo and Santos, Rafael Liza and Postali, Fernando Antonio Slaibe, Pyramidal Ownership Structures and Its Effects on Firm Value: The Case of Going Public Companies in Brazil during 2004 to 2007 (Portuguese) (June 21, 2009). Available at SSRN: https://ssrn.com/abstract=1423585 or http://dx.doi.org/10.2139/ssrn.1423585

Renata Macedo Verne

affiliation not provided to SSRN ( email )

Rafael Liza Santos (Contact Author)

University of São Paulo (FEA-USP) - School of Economics, Management and Accounting ( email )

Av. Prof. Luciano Gualberto 908
São Paulo SP, São Paulo 05508-900
Brazil

Fernando Antonio Slaibe Postali

University of São Paulo (USP) - Department of Economics ( email )

Av. Prof. Luciano Gualberto 908
Sao Paulo SP, 05508-900
Brazil
+55 11 30915915 (Phone)
+55 11 30915915 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
162
Abstract Views
2,077
rank
247,857
PlumX Metrics