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

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