Corporate Governance and Ownership Structure in Emerging Markets: Evidence from Latin America
27 Pages Posted: 8 Jul 2008
Date Written: July 8, 2008
In a context of low protection for minority shareholders and large ownership concentration, I find that market participants impose a discount on the value of firms in which the voting rights of dominant shareholders exceed the cash-flow rights. However, investors prefer a dominant shareholder that is a corporation or a family group member rather than an institutional investor or a government agency. The evidence suggests that the stock market discount is lower when other corporations and family groups assume monitoring roles similar to that of creditors. Collusion between blockholders and dominant shareholders for the purpose of extracting private benefits of control, to the detriment of investors, is not evident.
Keywords: business groups, firm performance, emerging markets, panel data
JEL Classification: G15, G32, G34
Suggested Citation: Suggested Citation