Nonfinancial Companies as Large Shareholders Alleviate Financial Constraints of Brazilian Firm
22 Pages Posted: 26 Jan 2014 Last revised: 13 Aug 2014
Date Written: January 24, 2014
We analyze whether financial constraints of Brazilian firms are alleviated by ownership structure. More specifically, we study whether the presence of nonfinancial firms as shareholders of Brazilian firm mitigates financial constraints. We find that the presence of nonfinancial firms as significant shareholders reduces financial constraints, probably because such blockholders are able to reduce asymmetric information problems that are at the origin of financial constraints. This result indicates that the changes in the corporate ownership of the Brazilian firms, achieved within the country’s structural changes, have been positive for firm investment and have contributed to the development of Brazil.
Keywords: Investment, Financial constraints, Ownership structure, Ownership in hands of nonfinancial firms, Brazil.
JEL Classification: G32, G31
Suggested Citation: Suggested Citation