Corporate control and firm value: The bright side of business groups

Torres, Juan Pablo; Bertín, Mauricio Jara; López‐Iturriaga, Félix J.

doi:10.1016/j.jfbs.2017.04.003

Cited by 26 publications

(16 citation statements)

References 77 publications

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“…Regarding the concentration of ownership, this is negatively related to performance (column 2, DFC1 ¼ À1,531), a result similar to that reported in previous studies for Chile (Espinosa et al, 2018;Jara-Bertin et al, 2015). Affiliation with an economic group has a positive effect on financial performance (column 3, BUSGROUP ¼ 0.939), in line with that reported by Torres et al (2017), like pyramidal property, although the latter is only significant at 10% of the significance level (column 4, DVDFC ¼ 0.545).…”

Section: Resultssupporting

confidence: 89%

“…Companies affiliated to a business group are more likely to invest in emerging markets than in developed countries (Bhaumik & Driffield, 2011) because these business groups can overcome market friction (Khanna & Tice, 2001), as in markets with little skilled labor they can optimize resources by transferring human capital within the group (Torres et al, 2017).…”

Section: Business Groupsmentioning

confidence: 99%

See 1 more Smart Citation

International diversification, ownership structure and performance in an emerging market: evidence from Chile

Espinosa

Araya-Castillo

Bertín

et al. 2020

Economic Research-Ekonomska Istraživanja

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This research analyzes the impact of international diversification on the performance of Chilean exporting firms. Considering a sample of 47 companies listed on the Santiago Stock Exchange during the period 2003-2013, we found an international diversification discount. Secondly, when investigating the relationship between international diversification and performance, we found that they are related through an inverted U curve. Finally, we investigated how the ownership structure moderates the relationship between international diversification and performance, finding that the ownership concentration and pyramidal ownership positively impacts the performance of companies initiating international diversification strategies; and that the business groups' affiliation negatively impacts in the international diversificationperformance relationship.

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Section: Resultssupporting

confidence: 89%

Section: Business Groupsmentioning

confidence: 99%

International diversification, ownership structure and performance in an emerging market: evidence from Chile

Espinosa

Araya-Castillo

Bertín

et al. 2020

Economic Research-Ekonomska Istraživanja

Self Cite

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“…The literature has pointed out that retaining control is a key aspect in family firms (Caprio et al, 2011). Particularly in Latin American countries, families use control enhancing mechanisms to maintain corporate control more than their non-family counterparts (Espinosa et al, 2017;González et al, 2012González et al, , 2014Torres et al, 2017). 2 A common feature of these structures is the greater voting power in the hands of the controlling family, which is unusual in non-family firms, where other types of investors hold diversified investment portfolios.…”

Section: Theoretical Review and Hypothesesmentioning

confidence: 99%

Corporate governance in Latin American firms: Contestability of control and firm value

Jara

López‐Iturriaga

SanMartín

et al. 2019

BRQ Business Research Quarterly

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Using a sample of 595 firms listed in the capital markets of Argentina, Brazil, Chile, Colombia, Mexico, and Peru for the period of 2000–2015, we confirm prior literature by showing that when power distribution among several large shareholders (contestability) increases, firms’ financial performance is enhanced. More interestingly, we find that these relations are even more significant in family-owned firms, emphasising the relevance of contesting control in this kind of firm. Furthermore, contestability has a greater influence in family firms that have the most concentrated ownership. We also find that the legal framework attenuates the impact of the balance of ownership. Here, contesting control acts as an internal corporate governance mechanism that provides an alternative to the external legal setting. Taken together, our results mean that in institutional settings characterised by weak investor protection and possible conflicts of interest among shareholders, oversight by multiple large, non-related shareholders (balanced ownership concentration) becomes an important governance mechanism.

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“…16, N. 1, March 2018 Chinese firms consistent with the view of the higher efficiency of business groups' internal financing transfers, provided their firms' financial constraint is strong and the potential for conflicts of interest between controlling and outside shareholders is limited. There is also evidence of pyramidal business group affiliation related: to lower negative impact of the discrepancy between control and ownership on firms' value, as shown by Torres, Bertína, and López-Iturriaga (2017), who analyse Chilean nonfinancial quoted firms controlled by families; to higher fraction in capitalintensive industries in countries where financial markets are less developed, notably for young and small firms and for affiliates of large and diversified groups, as documented by Belenzon, Berkovitz, and Rios (2013) with data of a sample of firms from 15 developed European countries; and to investment opportunities financed by other affiliates' dividends, as presented by Gopalan, Nanda and Seru (2007), who explore exogenous variations in firms' investment opportunities arising from import tariff changes in a number of countries.…”

mentioning

confidence: 93%

Corporate Governance and Pyramidal Ownership: The Role of Novo Mercado

2018

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The literature has not reached a consensus on the motivation and implications of pyramidal ownership schemes. For some, such arrangements make it easier for controlling shareholders to expropriate outside investors. More recently, some studies have challenged this view and emphasized that their rationale lies in overcoming financial constraints. This paper focuses on whether firms owned through pyramidal schemes are more likely to be listed on the “Novo Mercado,” the Brazilian stock exchange’s premium listing segment created in 2000, which prohibits firms from issuing non-voting shares. We built a dataset of ownership data with annual observations for a panel of firms over the period 2003-2010 by hand-collecting data drawn from reports that firms submit periodically to the Brazilian securities regulator (CVM). Estimating fixed effects non-linear panel data models of a binary dependent variable, we find that firms listed on the Novo Mercado are less likely to be owned through a pyramid arrangement, result which appears to be consistent with the expropriation view.

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Corporate control and firm value: The bright side of business groups

Cited by 26 publications

References 77 publications

International diversification, ownership structure and performance in an emerging market: evidence from Chile

International diversification, ownership structure and performance in an emerging market: evidence from Chile

Corporate governance in Latin American firms: Contestability of control and firm value

Corporate Governance and Pyramidal Ownership: The Role of Novo Mercado

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