The effect of control-ownership rights and business groups on cash holdings

Silvia Amélia Mendonça Flores and Igor Bernardi Sonza

International Journal of Economics and Business Research, 2020, vol. 20, issue 4, 375-390

Abstract: The purpose of this paper is to investigate the influence of voting and cash flow rights deviations and group affiliation on the cash holdings of Brazilian companies. We employed a panel data analysis for 81 listed Brazilian firms during the period from 2010 to 2017, with Dynamic GMM-Sys. The results report that the greater the deviations between voting and cash flow rights, the higher is the cash holdings, probably related to future projects that provide private benefits. Controllers will have incentives to dispose of company resources (cash) for their interests, to the detriment of minority shareholders. The group affiliation is not a determinant of cash holdings in Brazil. The research brings new perspectives of complex organisational structures, such as companies with deviations of rights.

Keywords: cash holdings; voting rights; cash flow rights; deviations; business groups; Brazil. (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijecbr:v:20:y:2020:i:4:p:375-390

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