Pyramidal Ownership Structure, Dual Class Shares and Firms’ Financial Performance in Brazilian Market

Lelis Pedro Andrade (), Aureliano Bressan () and Robert Iquiapaza
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Lelis Pedro Andrade: Instituto Federal de Minas Gerais - IFMG - Campus Formiga.

Brazilian Review of Finance, 2014, vol. 12, issue 4, 555-595

Abstract: This study aims to identify whether there is a relationship between dual class shares issuance, pyramidal ownership structure and firms’ financial performance in the Brazilian market. To this end, univariate tests and panel data analysis were applied in a sample for the 2000 to 2012 period. The results indicate that there is a significant and negative relationship between dual class shares issuance and firm’s financial performance, regardless of whether there is a pyramidal ownership structure in firm. In other hand, we find positive effects from pyramidal structure on the firm’s financial performance, conditioned that there is no dual class shares issuance, and also on the absence of an excessive number of levels until the ultimate controlling shareholder in the pyramidal structure. These evidences suggest that the voting power matters to improve firms’ financial performance; and that there are benefits and costs from pyramidal ownership structure in Brazilian firms.

Keywords: Estrutura piramidal de controle; Emissão de duas classes de ações; Desempenho financeiro. (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Date: 2014
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