The Influence of Ownership and Control Structures on Firms’ Performance : Evidence from Brazil

This paper evaluates the influence of ownership and control concentration, as well as of some other characteristics of the controlling shareholders, on the performance of publicly traded companies. To address this objective, a panel analysis is carried out, relying on data over the period 1997-2002 compiled from financial and ownership structure reports that firms in Brazil are required to file with the securities market regulator. The main findings are the following: (1) high voting rights and cash-flow rights by the largest ultimate shareholder are, respectively, negatively and positively associated with firms' returns on assets — result which is in accordance with the “expropriation view”; (2) for the largest firms, returns on assets are correlated with both leverage (negatively) and size (positively); (3) the existence of pyramids and the percentage of non-voting preferred shares in the firm's capital do not seem to affect performance