Nonfinancial Companies as Large Shareholders Alleviate Financial Constraints of Brazilian Firm

22 Pages Posted: 26 Jan 2014 Last revised: 13 Aug 2014

See all articles by Vicente Lima Crisóstomo

Vicente Lima Crisóstomo

Universidade Federal do Ceará

Félix J. López-Iturriaga

University of Valladolid - Department of Financial Economics and Accounting; National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy

Eleuterio Vallelado

University of Valladolid; University of Valladolid

Date Written: January 24, 2014

Abstract

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

Crisóstomo, Vicente Lima and Lopez-Iturriaga, Felix Javier and Vallelado, Eleuterio, Nonfinancial Companies as Large Shareholders Alleviate Financial Constraints of Brazilian Firm (January 24, 2014). Emerging Markets Review, 18, 62-77, 2014.. Available at SSRN: https://ssrn.com/abstract=2384790 or http://dx.doi.org/10.2139/ssrn.2384790

Vicente Lima Crisóstomo (Contact Author)

Universidade Federal do Ceará ( email )

Fortaleza
Brazil

HOME PAGE: http://www.ufc.br

Felix Javier Lopez-Iturriaga

University of Valladolid - Department of Financial Economics and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34 983 184 395 (Phone)
+34 983 183830 (Fax)

HOME PAGE: http://www2.eco.uva.es/flopez

National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy ( email )

Lebedeva,27
Perm, Perm 614070
Russia

Eleuterio Vallelado

University of Valladolid ( email )

Avda. Valle Esgueva 6
47011 Valladolid, 47011
Spain
983423387 (Phone)
983186484 (Fax)

HOME PAGE: http://eleuteriovallelado.blogs.uva.es/

University of Valladolid ( email )

8 C/Plaza de Santa Cruz
Valladolid, Valladolid 47002
Spain
+34983423387 (Phone)

HOME PAGE: http://eleuteriovallelado.blogs.uva.es/

Register to save articles to
your library

Register

Paper statistics

Downloads
64
Abstract Views
523
rank
343,318
PlumX Metrics