ABSTRACT

The structure of corporate governance in Brazil is highlighted by the strong concentration of share ownership rights and control by a shareholder or by a controlling group. The theory reveals the potential impacts of share ownership concentration on corporate performance through incentive-effect and entrenchment-effect. Initially, the existence of a controller tends to reduce agency costs incurred by the company and, therefore, it is beneficial. However, high levels of share ownership concentration may result in expropriation of minority shareholders. In addition to empirically verifying the effectiveness of a corporate governance mechanism for performance, this study sought to evaluate the extent to which ownership structure affects the risk and value of companies. Thus, the main purpose of this research was to investigate the relationship among the ownership and control structure, value, performance and risk of non-financial Brazilian companies listed on the BM&FBovespa between the years 2004 to 2012. This research is classified as descriptive and quantitative. It used secondary data collected from Economática® database, data from the Brazilian Securities Commission (Comissão de Valores Mobiliários – CVM), and data from BM& FBovespa website. Econometric procedures involved the use of the regression model with panel data. The results revealed a negative and statistically significant relationship between concentration of voting rights and market value (measured by Tobin’s Q), corroborating Claessens, Djankov, Fan and Lang (2002)Claessens, S., Djankov, S., Fan, J. P. H., & Lang, L. H. P. (2002). Disentangling the incentive and entrenchment effects of large shareholdings. The Journal of Finance. 57(6), 2741-2771. and the entrenchment-effect. The performance variables (ROA and EBITDA) and risk (volatility of stock return) were notsignificantly affected, statistically, by share ownership concentration. Concerning the crisis dummies, especially the 2008’s financial crisis, the significance and negative sign in the specification value indicate that, in the occurrence of return crisis, the most concentrated structures penalize the firm value. About the models whose dependent variable was the risk, dummies alternated signal as the period, in other words, at the height of the crisis, the more concentrated companies presented higher volatility, but, after the critical crisis period, this same ownership and control structure reduced volatility.

KEYWORDS
Incentive-effect; Entrenchment-effect; Value; Performance; Risk